Standards lacking to justify race-based contract goals

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By Molly Willms

The disparity study that was used to justify the city of Milwaukee’s race- and gender-specific contracting ordinance also was its undoing.

Now, city leaders have to decide whether they will pay for another study or abandon the process as a potential prelude to another lawsuit.

“I think it’s too premature to determine whether we’re going to do another disparity study,” said Common Council President Willie Hines Jr.

If the city chooses to do another one, the study would be one of hundreds done nationwide since the U.S. Supreme Court’s 1989 decision in City of Richmond v. J. A. Croson Co., which established the standards of proof for government entities to put race- and gender-based contracting goals in place. Governments use disparity studies as the proof.

But what was mandated by the Supreme Court continues to be influenced only by local courts. Apart from case law, there is no consistent regulation, from state to state or company to company, of how studies are done, said John Sullivan, an attorney who works with plaintiffs who challenge disparity studies.

“There’s a certain wild west atmosphere to it,” he said. “The federal government hasn’t put down its heavy hand to say, ‘This is how you do it.’ I don’t know how they could, really.”

The challenge for governments is to choose the best disparity study firm and accept the risks that come with that, said Colette Holt, a California attorney who conducts disparity studies.

“People,” she said, “will just have to educate themselves and try to figure it out the best they can. But if they’re looking for certitude, they’re not going to get it.”

Failed first attempt

Milwaukee commissioned its first disparity study after a 2007 evaluation of the city’s race-neutral contracting goals suggested a statistical analysis would show disparities among women- and minority-owned firms. Specifically, city leaders suspected the number of available firms was disproportionate to the number of firms receiving city money.

In 2009, the city hired D. Wilson Consulting Group LLC, Jacksonville, Fla., to do a disparity study. In January 2012, Milwaukee adjusted its ordinance in accordance with the study’s results.

The city’s former ordinance set aside 25 percent of public construction money for companies categorized as disadvantaged businesses. Ordinance 370 divided it for specific groups.

Firms owned by African-Americans were entitled to 5.57 percent of contract money, Asian-Americans to 0.07 percent and women to 7.31 percent. There was no money reserved for Hispanic- and American Indian-owned firms. Instead, they could compete for the remaining 12.05 percent with all companies categorized as small businesses.

All companies were eligible to compete for the 75 percent that was not set aside.

The division left the Hispanic- and American Indian-owned companies at a disadvantage, according to a lawsuit, filed by the chambers of commerce representing the two groups, against the city and D. Wilson. According to the Hispanic Chamber of Commerce of Wisconsin’s complaint, the study used flawed methodology, resulting in erroneous conclusions that misrepresented the true nature of possible contracting disparities.

Milwaukee chose to settle the lawsuit and agreed to suspend in February the race- and gender-specific parts of Ordinance 370 and eventually repeal them. Further, Milwaukee is forbidden from using the data from the 2009 study in changing city policy.

For Stephanie Findley, owner of Milwaukee-based Midwest Construction & Management Services LLC, an African-American-owned company, the change has meant going from three contracts and $150,000 in work with the city in 2012 to nothing since February.

“It went completely black,” she said. “Not a call whatsoever.”

Clifton Phelps, a board of directors member at the African American Chamber of Commerce of Greater Milwaukee and vice president of administration at JCP Construction LLC, Milwaukee, said the silence will continue as long as race- and gender-specific goals are not in place.

“There are some companies,” he said, “that really need 370.”

Problems could remain

While some aldermen, contractors and ethnic chamber leaders have said they will not support race- and gender-specific goals in Milwaukee, Eve Hall, the president of the African American Chamber, said they are necessary because disparities still exist in the city.

“There still needs to be something in the policy,” she said, “to help with those numbers.”

Holt said she is inclined to agree.

“When you don’t have goals,” she said, “you don’t get results.”

That is why Audrey Edmonson, a commissioner for Miami-Dade County in Florida, said she supports her county’s disparity study, which is scheduled for a March completion.

“It’s just our responsibility,” she said, “to make sure there’s fair play for all residents within this county.”

Edmonson said she is willing to take the risk of a lawsuit to fix the underrepresentation of African-Americans in county contracting. Choosing California-based Mason Tillman Associates Ltd. To do the disparity study was an attempt to manage the risk, she said.

“They have a stellar reputation,” Edmonson said, “and they have won all of their legal challenges across the country.”

Representatives from Mason Tillman did not immediately respond to requests for comment. An online search of national court records did not reveal any judgments against the firm.

Managing the legal risk if Milwaukee attempts another disparity study is now a top priority, Alderman Ashanti Hamilton said. The city, he said, would have to choose a firm carefully and monitor its work.

“There is no guarantee,” he said, “that somebody else that you contracted with will do the work flawlessly, but what you do is protect yourself and you protect the public interest in the process.”

Lack of consensus

There is no standard guaranteeing a flawless disparity study. Each firm has its own methods, Sullivan said, and they change based on local court decisions.

An industry standard, Sullivan said, would have to come from some agreement about the best way of doing a disparity study.

“That consensus,” he said, “does not exist.”

Sullivan, for example, said he interprets the recent U.S. Supreme Court affirmative action case of Fisher v. University of Texas at Austin to confirm his view that a government entity must prove race-neutral contracting programs do not work before it can implement a race-based program.

Holt disagreed.

“There is no doubt in my mind,” she said, “that there is no requirement that they have to go try a bunch of race-neutral stuff and have it fail.”

Furthermore, Holt said, there is no need for disparity study standards or regulations.

“There seems to be some room,” she said, “for reasonable people to disagree about what appropriate methodology would be.”

Even if a standard were established, Sullivan said, it would be vulnerable to constitutional challenges.

“I don’t know how much good it would do, truthfully,” he said.

But if a standard withstood such a challenge, city’s such as Milwaukee would be on much more stable ground when commissioning disparity studies, said Linda Burke, Milwaukee’s deputy city attorney.

“If a state law is passed,” Burke said, “and it is found to be constitutional, then we would be in very good shape.”

If there had been some kind of standard when Milwaukee tried the first disparity study, Hines said, there might not be a discussion about what to do now.

“Unfortunately,” he said, “we have to start from scratch.”

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