Goals are set. Ordinances have been revamped, and there is money to be made in New Orleans—and not just with the city of New Orleans. From school rebuilding and renovation to RTA facilities and streetcar lines, from the airport to sewer lines and pumping stations, billions of dollars will be spent in New Orleans over the next several years. Now that the city has revamped its DBE program and as leaders of other agencies express a continued commitment to ensuring economic inclusion, it’s time for everyone to really get down to business.
by Anitra D. Brown
In the fall of 2005, it was estimated that it would take about $200 billion in federal funds to rebuild New Orleans—from levee systems to highways and streets, from sewer pipelines to schools, homes, businesses and iconic structures. Even then the burning question was whether minority and other disadvantaged enterprises would get their fair share of the rebuilding dollars.
By 2010, just five years after the storm, about $130 billion had in fact been either spent or at least allocated for Katrina recovery in New Orleans.
But in the eight years since, a chief complaint among those with their eyes fixated on the local economy as well as local civil rights leaders has been that DBEs—any for-profit enterprise that is at least 51 percent owned by one or more individuals both socially and economically disadvantaged—have not been getting in on the recovery boon as much as expected in a city where Blacks still comprise the majority.
So as the eighth anniversary of Katrina approaches, the city of New Orleans is revamping its DBE program with the recent approval of amendments to the ordinance authorized in 2010 that established goals of 50 percent for local business participation and 35 percent for DBE participation.
Mayor Mitch Landrieu, flanked by members of the City Council and leaders of other local agencies, recently held a press conference to announce the changes that maintain those goals while improving accountability, compliance, contract monitoring and goal-setting.
Landrieu has said honing the compliance part of the ordinance to ensure that what is written in the law is actually happening on the ground was key to economic development for the entire city.
The announcement regarding the changes to the DBE ordinance came weeks after the city unveiled Prosperity New Orleans, a plan designed by the New Orleans Business Alliance to drive diverse and sustainable economic growth in New Orleans with 2018.
“One of the critical parts of (that economic plan) is to make sure that we all go together, that nobody is left behind and that the people of New Orleans will rebuild the city of New Orleans,” the mayor said during the press conference. “We now have an ordinance that has teeth in it, that can make sure that everybody that does business with the city of New Orleans is in compliance or you will not be doing business with us.”
Director of Supplier Diversity Arkebia Matthews said the city looked at best practices from across the nation and talked to both prime and DBE contractors to get their take on how the program works and what needs to be improved.
“We were able to find common ground that we believe will create a stronger and more effective DBE program,” Matthews said in a printed statement. “These reforms will increase oversight and ensure that our office can position the program for greater success.”
Specifically, amendments to the ordinance will:
• Implement specific contract goals for each contract based on the availability of DBEs in the relevant market sector. The ordinance maintains the overall goal of 35 percent DBE participation, but allows for the goal to be higher or lower as determined on a project-by-project basis;
• Establish sanctions for non-compliance for prime and DBE subcontractors that could include termination of contracts;
• Impose restrictions on DBE subcontracting;
• Strengthen the city’s “good faith efforts” policy by establishing clear guidelines and implementing strict parameters of acceptability;
• Expand opportunities for the city’s list of certified DBE firms by the New Orleans Redevelopment Authority’s (NORA) commitment to utilize certified DBEs disposing of 25 or more residential properties;
• Ensure accountability by tracking DBE goals and attainment rates in reports submitted with annual budget requests;
• Expressly recognize the Office of Supplier Diversity’s review of contracts being amended to better ensure the commitment of DBE participation; and
• Increase monitoring of and impose restrictions on DBE substitutions.
District D Councilwoman Cynthia Hedge-Morrell, who was the lead author of the legislation, said “supporting DBEs is about helping our local businesses grow and keeping our tax dollars circulating in our local economy. This has been a goal of mine for several years.”
District B Councilwoman LaToya Cantrell said, “I am very proud and excited to support today’s effort to strengthen and expand our city’s DBE program. We’ve talked for a long time about ways to better include disadvantaged entrepreneurs in our city’s economic engine and this new legislative effort is an important step toward getting that done. I look forward to seeing this legislation come to fruition and building a city with financial opportunity for all of its residents.”
And when he campaigned to fill the unexpired term on the District E seat, Councilman James A. Gray, often pointed to the need to strengthen the city’s DBE program to ensure that participation in city contracts better reflected the population.
“As the son of a contractor, I know that construction jobs put food on the table in many homes throughout New Orleans,” Gray said. “This ordinance improves the system in place for DBEs by ensuring that independent contractors get their fair share of the work available.”
Getting it right
The city of New Orleans is not the only local entity to take a good look at its reflection in the DBE mirror.
In 2009, the New Orleans Regional Transit Authority with the help of Citizens United for Economic Equity, a certified Community Development Financial Institution created to encourage economic equality in post Katrina New Orleans, honestly evaluated its Disadvantaged Business Program.
The results were sobering. The agency had underperformed in meeting its DBE goals seven out of the nine years (2001 – 2009) examined and fell short of the goal in actual dollars over the nine-year period by more than $14.4 million.
In 2001, RTA’s DBE goal was 30 percent and actual participation was 11 percent. In 2009, the goal was 20 percent, with actual participation at only eight percent. And in 2008, RTA recorded zero DBE participation despite a goal of 20 percent. The agency only met or exceeded its goal two years during the period—in 2002 when the goal of 17 percent was exceed with an actual participation of 19 percent and again in 2008 with an actual participation of 29 percent, which was well above the 17 percent goal. After that report, which included honest evaluation about the agency’s failures in coordination and communication with respect to its DBE goal setting, monitoring and enforcement, DBE goals and actual participation at RTA has become steadier and less sporadic with actual participation numbers that are closer to goal.
In 2010, RTA exceeded its goal of 20 percent with an actual participation of 27 percent. And while the agency came short of meeting its 30 percent goal for years 2011 and 2012, it still posted commendable results with actual participation levels at 24 percent and 25 percent respectively. The goal for 2013 is also 30 percent.
Barbara Major, who only recently resigned as RTA chairwoman and who will remain on the board has said that an “agenda of equity and fairness will always follow what I do.” It was under Major’s leadership as chairwoman of the RTA Board of Commissioners that the study was conducted. Major was also at the helm as DBE participation in RTA projects grew steadily.
And Major, who is also a member of The Collaborative, a business advocacy group that has worked to push for the strengthening of the city’s DBE program, has had positive things to say about the city’s recent steps to strengthen its program.
“This proposal is a major milestone that demonstrates the city’s commitment to inclusion, fairness and accountability,” she said. “As we continue rebuilding the community, it’s critically important to make sure our small and marginalized businesses are at the table and have opportunities for public work.”
For its part, RTA has set its DBE participation goal at 28 percent for 2014-2016, and continued progress toward meeting or exceeding its goals is especially important as the agency has a number of projects planned, including renovations and repairs to facilities at Carrollton Avenue, Napoleon Avenue, in New Orleans East, and the Algiers Park & Ride, as well as the construction of a new streetcar line along Rampart.
In the meantime, Landrieu touts efforts of his administration to support DBE inclusion.
“We have worked hard to level the playing field for small and disadvantaged businesses in the last three years,” he said in a printed statement.
Under the Landrieu administration, the number of certified DBEs has doubled from about 300 to more than 600 local companies, according to an administration press release.
Just the First Step
But it will take more than doubling the numbers of certified DBEs to make a real difference. Though a primary goal of DBE programs is to remove barriers and create an environment where women and minority owned businesses can compete for government contracts, another objective – though often less pronounced – is to assist those firms in developing the ability to successfully compete in the larger market for business outside of DBE programs.
To be sure, there are such success stories in New Orleans, such as waste management companies Metro Disposal and Richard’s Disposal, which currently provide residential garbage collection through multi-million dollar contracts for the city of New Orleans. They were awarded their contracts shortly after Katrina. And owners of both firms have talked candidly with The Tribune about the many years they put in work as subcontractors, building their businesses and gaining the experience and resources that ultimately allowed them to come out of the shadows of the DBE program and subcontracting to landing major city business as the prime contractors.
In short, certification is just the first step for Black, women-owned and other minority-owned businesses. And certifying DBE’s, setting and even meeting goals are just the first steps for any government agency serious about creating a robust program. That is why many DBE programs also feature education components, emphasize the timely and fair payments and, where warranted, offer at least partial upfront project costs for businesses that have been awarded substantial contracts through DBE programs.
According to MWBE Enterprises, Inc., a consulting firm that has specialized for 15 years in assisting women and minority owned businesses with seeking opportunities in private sector supplier diversity programs as well as local, state and federal government procurements, success in the marketplace requires diligence and careful planning. MWBE’s website cautions that “once certified, the small business owner often finds themselves at a loss on how to utilize their certification, retrieve information on opportunities, responding to bid requests.”
And that’s one reason Michelle Stanton, director of operations for CUEE, which was created to support economic parity in the wake of Hurricane Katrina with the mission to invest in small, women-owned, and minority-owned businesses in order to alleviate the racial and economic disparities, says she is optimistic about the changes, calling them “a good starting point”, but reminding that “the battle is not over”.
She also says she is hopeful that the city, through its office of Supplier Diversity, will continue to do more to make the certification process more efficient.
“Everybody involved, the business owners and the city needs to keep working on this, keep pushing on this,” says Stanton, who is also a member of The Collaborative.
Business owners must get engaged, Stanton says, and not rule themselves out of opportunities by operating under the impression that DBE certification is only for contractors.
Opportunities are available for small and minority owned businesses of almost any sort, she says. And requests for bids and proposals are sought for sundry goods and services, not just construction projects.
The businesses need to stay on top of things,” Stanton says. “They need to look at (government and agency procurement) websites and use the resources that are available.”
Money to be made
For the city, there are the ongoing plans for redevelopment of hospitals in the heart of New Orleans and New Orleans East, as well as a number of construction projects related to streets, parks, and other areas of the city’s infrastructure.
Both the Louis Armstrong New Orleans International Airport and the New Orleans Sewerage and Water Board have DBE programs with participation goals that their respective leaders are committed to reaching. More importantly, much like the city of New Orleans and RTA, both agencies also have a number of big-dollar projects that minority-owned and women-owned firms must share in.
For instance, the airport has an $826 million renovation of the terminal in its future. This spring, the New Orleans Aviation Board recommended the expansion and redevelopment plan. The plan calls for a $650 million, 30-gate terminal with three concourses and a parking garage. It will also include a $17 million hotel, a $72 million power station and an $87 million ramp to connect I-10 traffic to and from the new terminal. Work is expected to start in 2014.
Newly-selected Aviation Board chair Cheryl Teamer, a local attorney, will be at the helm of the board as those renovations take place.
And at the time this article went to press, the Sewerage and Water Board had three open Request for Bids/Proposals on three construction projects funded by Hurricane Katrina Mitigation Grants, including the replacement of the Plum Orchard Lift Station, replacement of the DODT Sewage Pumping Station and replacement of the Victoria Sewage Pumping Station, along with other requests for goods and services.
Meanwhile, both the RSD and the Orleans Parish School Board have and will continue to oversee major construction projects related to renovating and rebuilding schools in New Orleans. The School Facilities Master Plan for Orleans Parish maps out a more than $1.8 billion investment in the rebuilding and renovations of school facilities, with more than 83 percent or $1.5 billion plus coming from FEMA construction funds.
That is why Stanton says it is incumbent upon business owners to do their research and work to understand what it means to be DBE-certified. She adds that many minority-owned businesses have steered away from DBE certification because of paper work required to gain certification. But she urges them to do what it takes to get certified.
“That DBE database, that’s where they are going to be looking when the contracts come.”