Is Milwaukee equitable for minority businesses?
New study may answer concerns about contracts
Each year, millions of dollars in contracts are awarded by the City of Milwaukee — from major construction projects to office supplies. And every year, businesses owned by minorities and women compete for those city dollars.
Now, a long simmering debate over whether the city’s process for awarding contracts is equitable for those businesses may be coming to a head through a new study that is examining the city’s contracting system.
The city’s process for awarding contracts has long been “race-neutral,” which means race and gender cannot be used by the city as it awards contracts.
In comparison, Milwaukee County’s Targeted Business Enterprise program and the state of Wisconsin’s Disadvantaged Business Enterprise (DBE) certification program for Department of Transportation projects have minority participation requirements, which means they are “race conscious” — race and gender can be considered when awarding those contracts.
In St. Louis and other cities, such disparity studies have led to reforms and contract recipients being more reflective of the business landscape, racially and gender-wise.
In Milwaukee, an attempt to change the law based on a prior study foundered in 2012 over allegations the study was flawed.
Minority contractors say this closer look at the city’s process, spearheaded by Ald. Russell Stamper III, is long overdue.
Supporters argue that broader participation in city contracting can help Disadvantaged Businesses Enterprises (defined by the Wisconsin Procurement Institute as businesses with “Native American, Black, Hispanic, Asian Indian, Asian Pacific or women ownership”) thrive, build capacity and create more jobs.
Others warn that city contracting is just one piece of the puzzle for such
“They will only hire minority contractors to do 25% of the work.” Brian Mitchell Wisconsin Department of Transportation business relationships manager
businesses and some question whether such a policy shift will hurt other groups or represent an undue governmental influence on the industry.
Roy Evans, a civil rights attorney and former independent monitor for the state’s Disadvantaged Business Enterprise program, said the new study is the first step to address disparities that continue to exist at the city level.
“We’ve got a lot of catching up to do,” he said.
Does a ‘race-neutral’ process produce a race-neutral outcome?
Brian Mitchell, a business relationships manager with the state Department of Transportation, spent 30 years as a contractor in the steel and bridge construction industry.
In that role, Mitchell said he faced hurdles from the beginning, struggling to get capital to start his business, receiving different rates to rent equipment and going through the process to become certified as a minority business under the state’s DBE program.
He also said he said he was challenged by working with people who “were no more prepared to work with a Black man than I was to work with them.”
Some challenges made it impossible for him to compete fairly, he said.
“Most of these programs benefit white females who are almost always connected in the industry. For years, I competed against a woman who was considered a minority-owned company,” he said. “Her father owned one of the largest construction companies in that particular state, and her husband was their head estimator. Her husband would call me up at night and solicit my project prices ... and I would give them the most closely guarded secret of my company.”
The disparity study underway in Milwaukee has the potential to lead to a more level playing field for such businesses if it’s done right, Mitchell said.
“You have to ask the correct questions, or you end up with a study that produces numbers that don’t represent the realities on the ground,” he said.
A contractor, who didn’t want his name used out of fear for losing business, agreed. In his experience, many Black businesses have poor relationships with developers and project managers but don’t want to disclose that.
“When there’s government financing tied to a project, it normally requires 25% minority participation,” he said, referring to Milwaukee County’s Targeted Business Enterprise participation requirement. That requirement says that on construction projects, DBE (minority and women-owned) firms, must complete 25% of the work.
The contractor said most Black businesses are only called to fulfill that requirement. “They call us and say we’ve got to spend 25% of our business with minorities. That means they don’t want to hire the minority business for all of the carpentry work. They will only hire minority contractors to do 25% of the work.”
Black contractors may not want to disclose to researchers what he calls the “tacky 25% welfare relationships” because Black contractors find it embarrassing.
“On the Black side of the street, people are used to the 25% relationship. There’s an attitude of ‘Let’s just take what we can get.’ Will the contractors admit that they’re being forced to function at a lower level? You can prove that a disparity exists and undermines the process, but who’s going to admit to any of this? They won’t be honest enough to give context to the disparity study.”
Disparity studies can be used as the basis for race-conscious policy-making
In 1989, the Supreme Court ruled that before city governments can enact raceconscious public contracting programs, they had to conduct a disparity study and prove discrimination in public contracts.
Milwaukee gives preference to some businesses under its Small Business Enterprise program so they can build capacity. However, except for a brief period in 2012, Milwaukee’s process for awarding contracts has been race-neutral.
Evans, the civil rights attorney, believes that method is inadequate.
“If a problem is created because of race, which means discrimination and disparity, you need a race-based remedy to right the disparity,” he said.
The city has been here before. In 2010, Milwaukee contracted with a Florida firm, D. Wilson Consulting Group, to complete a study of government contracts from 2005 to 2008 and found that minority businesses were “significantly underutilized” based on the number of eligible firms.
Subsequently, the city developed Ordinance 370, which allowed it to implement race- and gender-conscious participation targets.
But the Hispanic Chamber of Commerce of Wisconsin and the American Indian Chamber of Commerce of Wisconsin filed a lawsuit arguing that the study — which found Hispanic and Native American businesses as “overutilized” in construction — and a subsequent ordinance punished those groups for their success.
The city settled the case, and the ordinance was repealed.
It is unclear why the study was considered invalid and the consulting firm no longer appears to be in business. Nor were there details in the settlement itself.
Fred Royal, first vice president of the Milwaukee chapter of the NAACP, who advocated for passage of the ordinance, said the study was thrown out because it failed to include two city departments.
Meanwhile, Mitchell said the study excluded the views of contractors working on building and surface construction projects and that it ran into political opposition.
Both said the study’s failure represented a lost opportunity.
In 2018, the city tried again. In the budget passed by the Milwaukee Common Council that year, $500,000 was allocated for the new disparity study and an Atlanta consulting firm, Griffin & Strong, P.C., won the contract in the summer of 2020.
Nikki Purvis, Milwaukee’s chief equity officer, wrote in an email to the Milwaukee Journal Sentinel that the city is expecting a “quality study” and added: “When it concludes, we will be open to hearing any findings and recommendations they present to the mayor and Common Council.”
Milwaukee is one of many locations pursuing disparity studies
Since 2020, Dallas, St. Petersburg, Toledo, Frederick, Md., Oakland, Fayetteville, N.C., and others have either begun or released the results of disparity studies. Such studies have been used as the legal basis for legislation in other cities.
The president of the NAACP’s St. Louis chapter, Adolphus Pruitt, said the organization’s advocacy for a disparity study and the subsequent law that arose from it, represented progress for the community. A community benefits agreement with the Metropolitan St. Louis Sewer District has led to “hundreds of millions of dollars going into the hands of minority contractors and the inclusion of women,” he said.
Strong compliance and monitoring mechanisms, efficient digital tracking, and strict planning requirements are part of the reason, he said.
“For years, we’ve had goals put in place based on disparity studies here in the city and the goals were not met, so we didn’t get the change,” he said. “The only way you get the change is ... a stronger and more effective monitoring and compliance mechanism.”
Now, he said, “When contractors do projects with the MSD, there are no ifs, ands or buts about it.”
Experts agree that effective monitoring and compliance help reduce disparities. But many caution that government contracting is only one of the hurdles facing minority and women contractors.
Samuel Myers Jr., an economist and government contract expert at the University of Minnesota, pointed to continuing discrimination within industries, in lending and in insurance, as well as unwieldy contract requirements — requiring businesses have 10 years of experience with projects of $10 million, as one example.
Rick Esenberg, president for the conservative Wisconsin Institute for Law and Liberty, argues that any legally sound policy must be industry-specific and not go too far.
“Generally speaking, you cannot support a race-conscious program by simple reference to societal discrimination,” he said. “There has to be a connection or relationship between the extent
“We’ve got a lot of catching up to do.” Roy Evans Civil rights attorney and former independent monitor for Disadvantaged Business Enterprise program
of preference you’re extending the discrimination you show and the way it impacts the current market.”
Esenberg isn’t convinced that a race-conscious policy would be good policy.
“Someone could say, ‘If you have a disadvantaged business program, isn’t that good enough?’ You’re giving people who haven’t established themselves in the city an opportunity to contract with the city. We’ve had problems in the past with people who operated businesses that were certified as minority owned and disadvantaged and they really weren’t because the folks were gaming the system in some way.”
But Royal said he believes that a race-conscious approach would force all developers and property owners, including the city, to build relationships with minority businesses. And Ugo Nwagbaraocha, president of the Wisconsin chapter of the National Association of Minority Contractors, said the current race-neutral policy “flies in the face of reality.”
“We know that race, with empirical data to support this, has historically been a barrier to business participation (and) wealth-building opportunities,” Nwagbaraocha said.
There is a big disparity just in the numbers of businesses. In 2018, for example, Wisconsin had 13,791 non-minority-owned construction firms compared to 592 minority-owned firms, according to the U.S. Census Bureau.
Mitchell said that although he believes there will always be push back against race-conscious policies around awarding contracts, change is inevitable.
“Politics is about dividing a pie, and everyone wants a bigger slice of the pie. Anytime you talk about changing the status quo, there are people invested in the status quo who don’t want it changed at all,” he said. “But I also think that Milwaukee and the rest of our cities can’t push forward and develop unless they envelope all of their population.”