LA METRO 2017 DISPARITY STUDY www.bbcresearch.com bbc@bbcresearch.com 303-321-2547
DISPARITY STUDY OBJECTIVES Assess whether minority-/women-owned businesses (M/Ws) face discrimination 1. Assess any underutilization of M/Ws 2. Examine any barriers in Los Angeles marketplace 3. Review contract policies, program measures 4. Refine current program measures 5. Assist with program compliance implementation (including goal setting) 2
BBC DISPARITY STUDY Project management Community engagement Legal analysis and framework Review of contracting Utilization analysis Availability analysis Disparity analysis Explorations for any disparities Analyses of marketplace conditions Recommendations Reports and presentations 3
DISPARITY ANALYSIS 4
2017 DISPARITY STUDY OVERVIEW Study period January 1, 2011 through December 31, 2015 Study industries include construction, professional services, and goods and other services Study area is Los Angeles County Disparity analyses conducted on 12,000 prime and subcontract pieces worth more than $3 billion Qualitative data collection included 40 in-depth interviews, a public meeting, written testimony, and a focus group 5
UTILIZATION ANALYSIS Utilization is the percentage of prime contract and subcontract dollars that Metro awarded to minorityand woman-owned businesses during the study period. White woman 2.6% Black American 3.4% Asian Pacific American 2.5% Subcontinent Asian American 1.0% Hispanic American 12.9% Native American 0.7% Total 23.2% Please refer to slide 11 for the race and ethnicity definitions. 6
AVAILABILITY ANALYSIS Availability is the percentage of dollars that one might expect minority- and woman-owned businesses to receive based on their availability for specific types and sizes of Metro prime contracts and subcontracts. White woman 4.4% Black American 6.8% Asian Pacific American 2.5% Subcontinent Asian American 0.6% Hispanic American 16.3% Native American 0.7% Total 31.3% 7
DISPARITY ANALYSIS OVERALL Minority/Woman 74 White woman 59 Black American 51 Asian Pacific American 102 Subcontinent Asian American American 159 Hispanic American 79 Native American 110 0 20 40 60 80 100 120 140 160 180 200 The solid line down the center of the graph shows a disparity index level of 100, which indicates parity between utilization and availability. Disparity indices less than 100 indicate disparities between utilization and availability (i.e., underutilization). For reference, a dotted line is also drawn at a disparity index level of 80, because courts typically use 80 as a threshold for what indicates a substantial disparity. 8
DISPARITY ANALYSIS - GOALS VS. NO GOALS On many of the contracts during the study period, Metro applied race- conscious DBE subcontracting goals. BBC conducted an analysis on sets of contracts where goals were applied with those that were not subject to race- conscious measures. This figure presents disparity analysis results for contracts awarded using DBE goals and contracts awarded without using DBE goals. Minority/Woman Goals 53 No-goals 96 White woman 37 116 Black American 30 64 Asian Pacific American Subcontinent Asian American American 73 149 160 161 Hispanic American 59 98 Native American 52 200+ 0 20 40 60 80 100 120 140 160 180 200 9
POTENTIAL BASE FIGURE AND STEP-2 ADJUSTMENT Potential Base Figure 27.0 percent Downward Past DBE participation Upward Disparities in business ownership 10
DBE DEFINITIONS ACCORDING TO 49 CFR 26.5 Asian Pacific American include persons whose origins are from Japan, China, Taiwan, Korea, Burma (Myanmar), Vietnam, Laos, Cambodia (Kampuchea),Thailand, Malaysia, Indonesia, the Philippines, Brunei, Samoa, Guam, the U.S. Trust Territories of the Pacific Islands (Republic of Palau), the Common-wealth of the Northern Marianas Islands, Macao, Fiji, Tonga, Kiribati, Tuvalu, Nauru, Federated States of Micronesia, or Hong Kong Black American includes persons having origins in any Black racial groups of Africa Hispanic American include persons of Mexican, Puerto Rican, Cuban, Dominican, Central or South American, or other Spanish or Portuguese culture or origin, regardless of race Native American include American Indians, Eskimos, Aleuts, or Native Hawaiians Subcontinent Asian American include persons whose Origins are from India, Pakistan, Bangladesh, Bhutan, the Maldives Islands, Nepal or Sri Lanka 11
QUALITATIVE ANALYSIS 12
QUALITATIVE MARKETPLACE ANALYSIS BBC collected testimony and qualitative information about the local marketplace through a variety of efforts, including: In-depth interviews Telephone surveys Facilitated focus group Public meeting Written testimony 13
QUALITATIVE MARKETPLACE ANALYSIS The most common complaints about doing business with Metro included difficulties finding out about contract opportunities, the complexity of RFP requirements, meeting contract pre-qualification standards, and finding out which businesses were awarded contracts. Business owners and managers encouraged Metro to improve its contract notification process and recommended a number of possible solutions, including: Metro should consider streamlining how it organizes opportunities on its vendor portal to make it easier to locate relevant contracting opportunities. Metro should create a separate vendor portal for small business opportunities. Metro should do a better a job communicating about contract opportunities, especially via email. 14
QUALITATIVE MARKETPLACE ANALYSIS The majority of business owners praised DBE certification as advantageous. Several business owners thought the DBE program was helpful but were concerned about Metro s enforcement of it. Several business representatives felt that the DBE and other disadvantaged business programs in California have adverse effects on other businesses and on marketplace competition. 15
QUANTITATIVE ANALYSIS 16
PERCENTAGE OF WORKERS WHO WORKED AS A MANAGER IN THE CONSTRUCTION INDUSTRY, LOS ANGELES COUNTY, 2011-2015 Note: ** Denotes that the difference in proportions between the minority group and non-hispanic whites (or between women and men) is statistically significant at the 95% confidence level. Source: BBC Research & Consulting from 2011-2015 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/. 17
FINANCIAL CAPITAL Black Americans, Asian Pacific American, Hispanic Americans, and Native Americans in Los Angeles County earn substantially less than non-hispanic whites. In addition, women workers earn substantially less in wages than men. All minority groups in Los Angeles County exhibit homeownership rates significantly lower than that of non- Hispanic whites. Analysis of business loan denial rates in the United States show that Black American-owned businesses are substantially more likely to be denied business credit than businesses owned by non-hispanic whites. 18
PREDICTORS OF BUSINESS EARNINGS IN STUDY-RELATED INDUSTRIES, UNITED STATES, 2011-2015 Minority* Women* Minorities and women earned less from their businesses than their non-hispanic white American and male peers. Notes: Black American, Asian Pacific American, Native American, Subcontinent Asian American, Hispanic American, and women business owners exhibited significantly lower business earnings than their non-hispanic white peers. Source: BBC Research & Consulting from 2011-2015 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa. 19
PROGRAM IMPLICATIONS Large disparities on no-goals contracts and prime contracts Barriers for M/Ws without race-/gender-conscious goals Fewer disparities on goals contracts and subcontracts Evidence for success of race-/gender-conscious goals Overall availability of M/Ws 31.3 percent for Metro contracts Informs Metro s base figure for overall aspirational goal Substantial disparities on various sets of goods and services contracts Support for eligibility of race-/gender-conscious measures 20
PROGRAM RECOMMENDATIONS Continue to expand networking with MWBEs Explore unbundling large contracts Continue and potentially expand small business setaside program Consider continued use of DBE contract goals Consider best practices for encouraging small, minority-, and woman-owned businesses on designbuild, P3s, and other mega-projects 21