For decades, Kansas City had a program to award a share of its contracting dollars to businesses owned by women or racial minorities. The program was an effort to ensure equity in the city’s contracting, but Missouri Attorney General Catherine Hanaway is calling it discriminatory.
The Kansas City Council decided Thursday to remove its longstanding Minority- and Women-Owned Business Enterprise (MWBE) program after a lawsuit from Hanaway, a Republican, alleged the program violates the equal protection clause of the 14th Amendment and discriminates against white men.
A new small-business program will be created in its place. City officials cited the lawsuit and a U.S. Supreme Court decision that gutted the Voting Rights Act. But local business owners are skeptical that the replacement legislation will protect women and minority owners. They want a say in the city's new program.
Mayor Quinton Lucas said the change was necessary because Kansas City is “under attack from conservative legal interests.”
“They are interested in collecting the hides of American cities, and frankly, I don't think the attorney general of Missouri has anything else politically to do,” Lucas said. “She doesn't want to make Missouri safer. She does want to, I think, find ways to marginalize Blacks, women and others.”
The MWBE program has existed since 1981. The most recent version, approved in 2016, sets a citywide goal of awarding 14.7% of its contract funding to companies owned by racial minorities and 14.4% to women-owned companies.
The replacement program establishes four small-business certification tiers that include companies of various sizes and those owned by veterans.
Lucas said he believes the replacement is a strong program that clears the legal challenges the city is facing. Hanaway’s office sought to end the program Monday in federal court, but the city’s changes largely make that move unnecessary.
Still, the attorney general’s office will continue the lawsuit. It said it will seek damages for contractors who allege the MWBE program cost them money in lost contracts.
"The Missouri Attorney General’s Office is encouraged to see Kansas City considering steps to address race- and sex based discrimination in its contracting practices," a spokesperson for Hanaway's office said. "Our litigation will continue regardless of the City’s chosen approach."
Community pushback
Gabe Perez is the president of Unified Contractors, a nonprofit trade organization that works to grow minority- and women-owned businesses. (Perez is the father of one of KCUR’s employees.) He said he found out about the new program days before it was introduced, and thinks it won’t help minority contractors.
“You can't simply change the title of an ordinance and take the minority and women out and put ‘small business’ and expect it to work,” Perez said. “It's not the same thing.”
Still, Perez believed the old MWBE program needed changing outside of the discrimination Hanaway’s lawsuit alleges. Perez said enforcement efforts of the program in recent years meant that the same established companies got the work based on MWBE certification, but smaller businesses weren’t as able to compete.
Perez also noted some instances where women- or racial minority-owned businesses were chosen for a project based on city requirements, but then dropped after a bigger firm was awarded the project. Despite the changes Perez saw as necessary to the MWBE program, he said the city did not get meaningful input from area businesses to change it, and the new small-business program lacks clarity for contractors and developers.
Nearly all of those who gave public comment over the changes at a council committee meeting Tuesday were minority and women business owners. They also asked for more time to review and give input on the program.
Joe Davis, CEO of Custom Engineering and a member of the Kansas City Society of Black Engineers and Architects, told the city council committee he wants meaningful community engagement before the council changes the program.
“Taking additional time for review will strengthen the final policy, increase public confidence in the process and ensure that all affected stakeholders have a meaningful voice in shaping future contracting opportunities in Kansas City,” Davis said.
The council ultimately repealed the old program in exchange for the new small-business one. The council approved another ordinance that directs the city to hold public engagement over the new program. The city will also establish an advisory group of stakeholders to inform the new small business program and create a plant
Lucas said that compromise was necessary to get the new program in place as the city faces Hanaway’s lawsuit.
“The goal is to continue to support the types of contractors we've supported for years,” Lucas said. “To build what is a permanent program that does have the benefit of ongoing public engagement… but also handles the constitutional challenges that exist before us today.”
