Every year, Missouri makes what it calls a “feasible effort” at spending 10% of state agencies’ expenditures with minority-owned businesses.
In the past three decades, the state has only reached that goal four times.
In fiscal year 2021, minority contractors earned 8.2% of the $1.5 billion that Missouri spent in contracts, according to an annual report from the Office of Equal Opportunity. Women-owned businesses accounted for 3.5%.
In order for Missouri to be able to mandate minority participation goals on contracts — as the cities of St. Louis and Kansas City do to varying degrees — the state must conduct a “disparity study” every five years to stave off court challenges.
But it’s been eight years since the last study was conducted.
“It’s imperative to keep track of what we’re doing,” said Rep. Ashley Bland-Manlove, a Kansas City Democrat and president of the Missouri Legislative Black Caucus. “This is money, so this is accounting. I need all the details filled in.”
Bland-Manlove was among the Black legislators who pushed last session to secure $500,000 for the state’s third disparity study — which will investigate if Missouri is once again failing to equitably employ minority-owned and women-owned businesses.
On Jan. 31, the state announced that University of Missouri-Kansas City has been tasked with completing the study by June 30.
The 2014 study found “extensive evidence that discrimination on the basis of race and gender continues to operate in Missouri’s markets.”
It recommended the state make a number of changes, including paying minority contractors sooner, bidding out smaller contracts and conducting more outreach with minority and women business owners.
The upcoming disparity study came up during a recent hearing of the House Special Committee for Urban Issues, where Republican Rep. Rudy Veit of Wardsville said he’s been watching the state’s inclusion efforts since the 1980s and the same issues seem to persist.
“Has there been progress made or are we just reinventing the old wheel?” Veit asked representatives from the state’s Office for Equal Opportunity.
The OEO representatives told Veit to look at their annual reports.
Corey Bolton, director of the Office of Equal Opportunity, declined an interview request. But a spokesman for the office said in an email that since the 2014 study the state “has worked to improve overall support services as it relates to the applicant experience and certification processing times.”
How we got here
Missouri first established minority participation goals on state construction projects in 1984, after the federal government passed its requirements on the Department of Transportation contracts in 1980.
But it wasn’t difficult for white-owned businesses to get exemptions for the goals.
A 1989 St. Louis Post-Dispatch investigation found that 68% of state construction contracts between 1987 and 1988 were exempt from achieving the inclusion goals. And that year, minority businesses earned $3.7 million out of $352.8 million in construction contracts, and women-owned businesses earned $5.8 million.
In 1990, led by state Sens Phil B. Curls of Kansas City and J.B. Banks of St. Louis, the legislature passed a bill directing the Office of Administration to implement a plan aimed at increasing minority participation. It also ordered a study to look at potential disparities in how the state awards its contracts.
Four years later, then-Gov. Mel Carnahan’s administration analyzed how much MBEs and WBEs earned on agency contracts between 1989 and 1994 and found that less than 1% of those contract dollars went to MBEs and only 2.2% to WBEs.
And the study found the state’s minority- and women-owned businesses were capable of completing much more work than that.
So in 1998, Carnahan signed an executive order to “remedy discrimination” and require minority participation on contracts more than $100,000, with an overall goal of 10% MBE and 5% WBE participation for all purchases. The order also authorized state procurement officers to set a higher “desired goal” – 20% MBE and 10% WBE – if the study found that a certain contract had more minorities available in that industry.
But that all came to a halt in 2004, after a white-owned business sued the state in federal court.
A Colorado-based corporation called Behavioral Interventions Inc. lost a state contract providing electronic monitoring services for correctional facilities because it couldn’t find a minority subcontractor to meet the desired goal of 20% MBE.
The company sued, alleging the state’s inclusion program was unlawful because there was no current data showing a disparity in how the state awarded contracts. The last disparity study had been published in 1997, but the data cited in the study was 10-15 years old, according to the lawsuit.
The state settled with the corporation, after the judge said the program would not likely withstand an appeal with the study’s outdated information.
Citing the judge’s opinion in the Behavioral Interventions case, then-Gov. Matt Blunt signed an executive order in 2005 that made those goals “flexible,” and Missouri has not made the goals mandatory since.
And without those mandates, “we don’t have a program,” said Sen. Barbara Washington, D-Kansas City.
Kansas City has an annual goal of achieving 14.7% MBE and 14.4% WBE on all city contracts, but individual contracting goals are “flexible” and established on a case-by-case basis.
In the City of St. Louis, professional service contracts are set at 25% MBE and 5% WBE. For construction projects, it’s at least 21% African-American owned business, 2% Hispanic-American owned business, 0.5% Asian American-owned business, 0.5% Native American-owned business participation and 11% certified women-owned business participation.
Both cities’ goals were established based on the findings of disparity studies.
Yaphett El-Amin served as a state representative at the time of the 2004 lawsuit and fought to ensure that it didn’t completely shut down all attempts at minority participation.
“We knew…it could eliminate diversity goals and cost minority contractors and female businesses millions of dollars,” said El-Amin.
Since 2008, El-Amin has served as executive director of MOKAN Construction and Contractors Assistance Center, a non-profit that assists and advocates for minority- and women-owned firms.
“We still continue to swim upstream relative to diversity and inclusion,” she said. “We continue to always have disparity studies show that there is still a disparity. The whole goal of the disparity programs is to eliminate the disparity and get to a point where you don’t have goals anymore.”
Heated debate for funds
Many local governments and public agencies started conducting disparity studies after the 1989 U.S. Supreme Court ruling in the case of City of Richmond v. J.A. Croson Co.
The U.S. Supreme Court ruled that the City of Richmond’s minority participation program for municipal contracts was unconstitutional after finding that the city failed to identify a substantial need to level the playing field for minorities and women business owners.
Rep. LaKeySha Bosley, D-St. Louis City, said the debate in the House Budget committee meetings last session to secure the $500,000 for the disparity study was heated.
“It got heavy for a moment…because of us advocating for the data,” Bosley said. “You had individuals who didn’t want to see that happen and called it ‘cancel culture.’”
However, the data is necessary to pass legislation that will mandate participation goals, if the study shows that disparities still exist, Washington said.
“We want to help our businesses and entities in Missouri be able to get a piece of that pie, so that things are fair,” Washington said. “It encourages people to come to our state.”
According to the state’s announcement of the study, UMKC will be holding public meetings and inviting firms, stakeholders and organizations to attend. The first meeting is scheduled for March 16 at 10 a.m. at the Truman Building in Jefferson City, and people and companies can attend in person or via Zoom.
The UMKC team will be asking attendees to help identify barriers to earning state contracts.
Previous studies cited several challenges, including late payments, bonding and insurance issues, harassment and retaliation and the “good ole boy network barrier.”
Since the 2014 study was released, the Office of Equal Opportunity said it has created the ACCESS program, which connects certified MBEs and WBEs with information, resources and capital. The “Up2$10K” program encourages M/WBEs and departments to build procurement relationships through opportunities under $10,000.
“This program allows M/WBEs the chance to increase their knowledge of state/department procurement practices which leads to better understanding and engagement,” according to the office’s spokesperson.
In their annual reports, the Office of Equal Opportunity includes the total amount that MBEs and WBEs earned on state contracts each year. However, the office doesn’t track or report expenditures by company, a spokesman said.
The Independent found that in Missouri, more than 60% of the $123.2 million that state awarded to minority-owned enterprises, or MBEs, went to a corporation in New Jersey. In fact, several minority businesses that the state regularly contracts with aren’t based in Missouri, or even in the country.
For many years, a St. Louis-based and Black-owned business, World Wide Technology, had Missouri’s largest MBE contract. But in 2018, the state awarded the IT contract to SHI International Corp., an Asian-owned firm in New Jersey that is one of the country’s largest minority and women-owned businesses.
According to the state’s accountability portal, SHI International earned $74.8 million in fiscal year 2021.
“We want to create a workforce that is here in Missouri,” Bosley said. “We are trying to put Missourians to work – no offense to New Jersey or Texas or any other out-of-state business.”
This story was originally published on the Missouri Independent.
