American DBE Magazine - Summer 2020

Summer 2020

REMEMBERING

ANDREA HARRIS

DBE Survival Strategies in the Pandemic Age

Airport Industry Begins Recovery

COVID-19 Sparks Greater Innovation

by DBEs

Addressing Unconscious Bias in Supplier Diversity Lewis Leads CATS Through a Seismic Shift

/ summer 2020

1

Atlanta | Mobile | Orlando

WE ARE

BUILDING COMMUNITIES. CREATING OPPORTUNITIES. INSPIRING YOUNG PEOPLE.

#CERM25

CELEBRATING 25 YEARS OF EXCELLENCE WWW.CERM.COM 2

/ summer 2020

All Allinintogether together

Inclusion Inclusion Drives Drives Innovation Innovation In 2019, In 2019, Messer Messer Construction Construction Co.Co. spent spent $201M, $201M, 18.6% 18.6% of our of our purchases, purchases, with with certified certified M/WBE M/WBE businesses businesses across across ourour regions regions in the in the Midwest Midwest andand Southeast.

Southeast.

Dedicated Dedicated resources resources Excels Excels in company in company for for strategic strategic purchases purchases with with partnerships partnerships diverse diverse suppliers suppliers

Register Register your your business business as as a subcontractor a subcontractor at messer.com/about/mwbe at messer.com/about/mwbe

NationallyNationallyrecognized recognized best best practices practices

@messerwearebldg @messerwearebldg messer.com messer.com

/ summer 2020

3

20

28

34

24

Features

DBE Power Player

8

Andrea Harris Remembered

24

12

Covid-19 Sparks Greater Innovation by DBEs

By Peggy Beach

Yerba Buena Engineering & Construction

DBE Program Spotlight

By Sarah Magargee

16

Addressing Unconscious Bias in Supplier Diversity

28

30th Anniversary of Atlanta’s First Disparity Study

By Marcus Garner

By Kurt Merriweather

20

African American Chamber of Commerce of New Jersey Standing in the Gap

Business Development

40

INDUSTRIES

31 34

Airports

Lewis Leads CATS Through a Seismic Shift

37

4

By Colette Holt, J.D. and Joanne Lubart, J.D.

42

Airport Industry Begins Recovery

Transit Civil/Highway GDOT Major Mobility Investment Program Creates DBE Opportunity / summer 2020

Legal Update on Recent Contracting Cases DBE Survival Strategies in the Pandemic Age

By Franklin M. Lee, Esq.

44

Covid-19’s Impact on Construction

By Karen Barbour

46

PPP & EIDL Opportunities

By Allen Brown

8 Summer 2020 Volume VII - Issue II Publisher Shelton A. Russell

Branding Campaigns Copywriting & Editing

Managing Editors PR PROS, LLC

Crisis Communication

Creative Director William Cash

Media Coaching & Training

Digital Media Premier Web Design Solutions

Research & Strategic Planning

Editorial Karen Barbour Peggy Beach Allen Brown Marcus Garner Colette Holt and Joanne Lubart Franklin M. Lee Sarah Magargee Kurt Merriweather Shelton A. Russell

Strategic Communication

Graphic Design & Layout Public Relations & Media Relations Social Media Management Video Production Services

Headquarters 514 Daniels Street, #186 Raleigh, NC 27605 Website www.AmericanDBE.com About American DBE Magazine American DBE Magazine is the premier industry resource for individuals and stakeholders who work within the federal Disadvantaged Business Enterprises program administration. American DBE Magazine is published quarterly and distributed in all 50 states—plus Puerto Rico and the U.S. Virgin Islands—to DBE program administrators, business owners, and professionals in the Aviation, Highway Construction and Public Transit industries.

Subscriptions American DBE Magazine is published quarterly in Fall, Winter, Spring and Summer editions. The annual subscription rate is $24.99 including online editions, special industry reports, and four issues: single copy list price is $6.99 plus postage originating from Raleigh, North Carolina.

Advertisting Sales editor@AmericanDBE.com (919) 741-5233 (Office)

/ summer 2020

5

From the publisher

Adding insult to injury, we were hit with a watershed moment after the senseless killing of George Floyd at the hands of police officers in Minneapolis, Minnesota. Although the collective pain, anguish and anger many Americans felt after the deaths of Ahmaud Arbrey, Breonna Taylor, Botham Jean and others was significant, the country certainly was not ready for the global upheaval and waves of protests occurring in response to the killing of Floyd. It is safe to say that no one fully anticipated what has become of 2020 thus far, but here we are.

Black Lives Matter because all lives matter. The mere fact that this reality must be singled out considering what has been and is happening in American society, underscores the fundamental problems that exist in our country. The disproportionate deaths of black Americans by people responsible for serving and protecting them demands that this distinction be made.

However, the Black Lives Matter movement not only highlights the direct examples of the unfair treatment of members of our society, it also represents a metaphorical example of things happening in other aspects of society from education to housing, to health care to business opportunity.

Minorities and women across the country are fighting to utter the words “I can’t breathe” in response to organizations, systems and policies administered by people responsible for serving and protecting; who are metaphorically standing by while rogue perpetrators choke the life out of people they are charged with supporting –acting in ways that are counterproductive and contradictory to the duties they are authorized to deliver.

This is even true in the federal DBE Program and other government and corporate supplier diversity programs.

Although legislation and policies have been enacted for many years, there are subversive executive directors, CEOs, presidents, vice presidents and managers in every organization that undermine the mission of their programs and fail to aggressively

Because Black Lives

MATTER There is no way I could have imagined the experience of the first six months of 2020 after the excitement of starting a new decade on January 1.

Most catastrophic events in society come with a degree of forewarning that give at least some time to prepare before the catastrophe occurs. The clouds get dark and winds blow before a hurricane or tornado; tremors occur before an earthquake or volcanic eruption; and heavy rains occur before flooding. Although there were signs from Wuhan, China, that the Coronavirus pandemic was potentially a threat to America, it still feels like we were hit with a freight train we did not see coming down the track.

6

/ summer 2020

implement the laws and policies in good faith. These actions are classified as institutional racism, systemic racism or systemic discrimination. It is when organizations tolerate, support or even instigate behaviors contrary to the values the organization professes to uphold. As any DBE, MBE or WBE can affirm, one of the most frustrating aspects of business is when an organization fails to uphold the values it claims to support.

This issue of American DBE features a cover story on a champion of speaking truth to power and of holding people accountable for doing right by minorities and women. Andrea Harris, a small but mighty woman from North Carolina, spent her entire professional career fighting for underserved and underrepresented people in the areas of supplier diversity, education, housing, health care and financial services. She died in May 2020, but her legacy and the people she mentored along the way will keep her spirit alive for years to come.

This issue of American DBE also contains a host of stories related to America’s response and initiatives to lessen the impact of the Coronavirus pandemic; a story on the 30th anniversary of the nation’s first disparity study in Atlanta; and the story on Yerba Buena, a highly successful DBE firm located in San Francisco, California.

I wish you great success in the remainder of 2020 and I hope you enjoy this issue of American DBE Magazine.

Best regards,

Shelton A. Russell, Publisher American DBE Magazine

HAMPTON ROADS CONNECTOR PARTNERS invites you to be a part of

VIRGINIA’S LARGEST

TRANSPORTATION PROJECT The I-64 Hampton Roads Bridge-Tunnel in southeastern Virginia has long been one of the region’s most congested corridors. The existing 3.5-mile facility consists of two 2-lane immersedtube tunnels on artificial islands, with trestle bridges to shore. These tunnels opened in 1957 (current westbound lanes) and 1976 (eastbound lanes) and are approximately 7,500 feet long.

OVER

$100 MILLION

IN PROJECT OPPORTUNITIES FOR DBE AND SWaM FIRMS

Traffic on these four lanes exceeds 100,000 vehicles per day during peak summer traffic.

The Hampton Roads Bridge-Tunnel Expansion Project will ease this congestion with the addition of twin 2-lane bored tunnels just west of the existing eastbound tunnel. Also, the 4-lane segments of the I-64 corridor in the cities of Hampton and Norfolk will be widened.

WORKFORCE PARTICIPATION GOALS FOR LOCAL MINORITY AND WOMEN JOB CANDIDATES

Visit the project’s website at

www.hrbtexpansion.org to stay up to date on opportunities.

Hampton Roads Connector Partners | 240 Corporate Blvd. | Norfolk, VA 23502 | 757-578-9284 HAMPTON ROADS CONNECTOR PARTNERS IS AN EQUAL OPPORTUNITY EMPLOYER / summer 2020

7

Feature

Andrea Harris Remembered Long-time advocate was ‘small in stature, but a giant in leadership’

By Peggy Beach

F

ierce. Loving. Courageous.

Compassionate. Caring.

Passionate for Change.

Seeker of Justice. Advocate. A Star.

A Special Person. Mentor.

Friends and colleagues are using these words and phrases to describe long-time minority business advocate Andrea Lynette Harris, who passed away on May 20, 2020, at the age of 72.

Harris, a native of Vance County, North Carolina, helped found The Institute of Minority Economic Development, commonly known as “The Institute,” in 1986. The Institute is a non-profit organization created to promote minority- and women-owned businesses. She served as president of the Institute for more than two decades.

8

/ summer 2020

Kevin J. Price, current president and CEO of the Institute, has known Harris since he was in college. “She had an uncanny ability to influence, to persuade. She was a small woman in stature, but a giant in leadership.”

Inc., she led a staff of more than 120 employees administering Head Start programs to more than 500 children, employing more than 1,000 young people; and providing crisis relief and workforce development for adults.

Lew Myers, President and CEO of Downtown Durham, Inc., co-founded the Institute with Harris. He told WUNC’s The State of Things that Harris was “a special person.”

Six years later, Harris began representing older adults throughout the Southeast and in Washington, D.C., through the Office of Community Services. “She recognized that the elderly were not being taken care of,” Myers said.

“We met in 1971 when I was working in Warren County at Soul City,” Myers said. “She was working in Henderson just 10 minutes away. I knew right away that she was what I would call a star.” At the time, Harris, 23, was one of the youngest executive directors of a Community Action Agency. At Franklin-Vance-Warren Opportunity

In 1981, Myers hired Harris to work on minority business policy at the N.C. Department of Commerce. It was during meetings with members of the North Carolina General Assembly that Myers and Harris began to realize that they needed more data on minority-

owned businesses. “We needed a think tank,” Myers said. Thus, the Institute of Minority Economic Development was born.

They founded the Institute with the support of a grant from the Z. Smith Reynolds Foundation and the North Carolina Association of Minority Businesses. “Spectacular Magazine” published that in 1986, there were fewer than 30,000 minority businesses in North Carolina – today there are more than 132,000.

The Institute grew over the years to become a nationally recognized leader in the support and development of businesses owned by minorities and women. The agency served as the host agency for the North Carolina Minority Business Development Center for many years and remains as the host agency

Fierce. Loving. Courageous.

Compassionate. Caring.

Passionate for Change.

Seeker of Justice. Advocate.

A Star. A Special Person. Mentor. for the Small Business Administration’s Women’s Business Center (WBC). Harris helped establish the North Carolina WBC to train women to own and operate their own businesses. The Institute maintains WBCs in Raleigh and Charlotte, North Carolina. Harris also led The Institute to become the host of the South Atlantic Region Small Business Transportation Resource Center (SBTRC), which focuses on assisting firms in the South Atlantic Region that are interested in doing business with the U.S. Department of Transportation.

Although Harris was keenly focused on the development of minorityand women-owned businesses in North Carolina, she advocated for legislation and policies to support diverse businesses across the nation.

Anthony Robinson, President & CEO, Minority Business Enterprise Legal Defense and Education Fund in Washington, D.C., worked with Harris from the time The Institute was founded and remembers her

advocacy work at the federal level. He said, “Whenever she was here in Washington, D.C., at the national stage, she was always giving counsel; to Congress in particular, on the direction nationally – be it legislatively from a policy standpoint, or practically, in how these programs for minority business were being implemented on a local level... and especially at the state level.”

Franklin M. Lee, Esq., former Chief Counsel of the Minority Business Enterprise Legal Defense & Education Fund Inc. said: “She always came prepared with facts, data and compelling policy arguments for every legislative and budgetary challenge to MBE programs.

Late Maryland Congressman Parren J. Mitchell frequently praised her organization, the North Carolina Institute [of] Andrea Harris gives remarks at the 2017 Minority Economic Capital Area MED Week Conference in Development, as Raleigh, North Carolina.

(Photo by Rick Crank Photography) the quintessential gold standard for institutional advocacy on behalf of minority businesses at the state level.”

Farad Ali, former Institute president, worked with Harris for more than a decade. He said that Harris believed in using business as a tool to create justice for minority communities. “She believed that business serves as a hub for justice in the community,” Ali said. “You need to look at the community as a whole – church groups, Scouts, political groups, business, to create a better community.”

Valerie Jordan, Farad Ali, Andrea Harris and Roberta McCullough gather at the 2019 Women’s Business Networking Conference in Durham, North Carolnia. (Photo courtesy of The Institute)

Ali said that Harris had three arrows in her quiver: minority businesses, community groups, and Historically Black Colleges and Universities (HBCUs). The latter was very important to Harris, he said, because she often said that education was the main key to accessing opportunity.

Ali said: “She began focusing on the next generation in recent years.

We hired a lot of interns. Andrea made sure they visited businesses and legislators. She wanted them to understand how to make things better.” Harris also worked with / summer 2020

9

Building value through diverse partnerships

Become a preferred prequalified partner by registering with us at: www.LaneConstruct.com/work-with-us/subcontractors 10

/ summer 2020

national officials to improve the HBCU Capital Loan Program.

throughout his entire career.

“She wanted me to build my skill sets and felt that I needed to understand all the different pieces that go into creating a better community,” said Price, who became the Institute’s president and CEO in March.

Harris was also a graduate of an HBCU – Bennett College, a women’s college in Greensboro, North Carolina. A two-time member of the Board of “She was like a loving aunt,” Trustees, Harris contacted Price said. “She would tell you Bennett college president that you went off the rails and Dr. Suzanne Elise Walsh then say ‘let’s go get something several times a day. “If Andrea Harris greets participants at the Institute’s 2015 Executive to eat.’” Price said that Harris Networking Conference in Raleigh, North Carolina. she had a connection or instilled passion, work ethic, a dollar, Bennett had a and knowledge into all of her connection and a dollar. She mentees so that they could carry delighted in making those connections Harris passed away before the recent on her work. “Now it’s up to us to guide and contributing to support the college protests surrounding the death of the next generation,” he said. “Andrea’s ... I will miss her, but am so thankful George Floyd at the hands of police in leadership, wisdom, resourcefulness, to have been able to benefit from Minneapolis, Minnesota. Both Ali and and tireless advocacy and commitment her wisdom and wit,” Walsh said.

Price said that she would be excited to the cause of economic empowerment about the protests. “She believed is much more than missed. She was a Always interested in current issues, that you should change the system true friend to all of her fellow comrades Harris was concerned that the everwhen it needs changing,” Price said. in this struggle. Her passing leaves a increasing burden of student debt Ali added that she would encourage vast void in our family of MBE advocates would make it difficult for many college all those who want to change the that cannot easily be replaced.” graduates to buy homes or start system to work toward actually making businesses, Price said. “She told me that the change happen. “‘Don’t just say any stimulus package should include it, do it,’ she would say,” Ali said. a plan for handling student debt.”

Price said that Harris encouraged him

Subscribe today!

Visit us at: www.AmericanDBE.com

Julianne Malveaux, Ph. D., N.C. Senator Gladys A. Robinson, Congressman G. K. Butterfield (NC-01), Hilda Pinnix-Ragland and Andrea Harris connect at the 2015 Executive Networking Conference in Raleigh, North Carolina. (Photo by Rick Crank Photography)

/ summer 2020

11

Feature

Designed by starline / Freepik

COVID-19 Sparks Greater Innovation by DBEs

By Sarah Magargee

Three companies’ innovations are changing the way the construction and transportation industries operate post-COVID-19 The world is changing dramatically as a result of COVID-19, the disease caused by a coronavirus called SARS-CoV-2; challenging the norms in human interaction and leaving businesses large and small scrambling to adapt.

A post-COVID-19 world requires business owners to rethink entire business models – a proposition that , while scar y, could bring sweeping positive change in how the construction and transportation industries operate.

A New Way of Riding Sumithra Jagannath, president of ZED Digital in Columbus, Ohio, explained that a significant challenge facing the transportation industry is creating an affordable way to restore rider trust and streamlining the boarding process to reduce the risk of viral spread. Using the Internet of Things (IoT) and over-the-air fare validators, ZED Digital has created a touchless system for mass transit to collect and process fares that address many concerns in a post-COVID world.

Jagannath explained that ZED Digital

12

/ summer 2020

began developing over-the-air bus fare validators two years ago and has piloted the system in several states.

“The industry has been transitioning to over-the-air systems, and we saw a potential for us to use the IoT and create an affordable option for large and small transit authorities,” Jagannath said.

“Because of COVID-19, we want to limit contact between riders and drivers, and avoid crowding as much as possible. The technology that we had been developing addressed these concerns perfectly.”

emergencies from their smartphone, and real-time reports of how crowded approaching buses are, all help create a safer riding experience.

Jagannath said that ticket sales in locations using over-the-air fare collection saw less of a decline at the onset of COVID-19, and have since seen a faster recovery than those using traditional fare collection systems.

With ZED Digital’s technology, tickets are purchased via ZIG, a hands-free mobile ticketing app. Then over-theair fare validators enable hands-free boarding by collecting fares instantly without riders having to remove their smartphone, scan a QR code, or swipe a card. This technology costs 8-10 times less than traditional fare collection methods and provides a no-touch way to access public transit. Over-the-air fare collection also allows for rear door boarding and lessens the risk of rider fraud.

Since the COVID-19 fallout, ZED Digital has added other features that respond to the new demands of a country recovering from a pandemic.

Contact tracing capability, the ability for passengers to report problems or

Zed Digital is using mobile app technology to increase hands-free fare collection and contact tracing by transit agencies.

“This is a clear indication that mass transit needs to put a lot of the old fare selection methods into question,” Jagannath said. “This might signal the death of the traditional fare box; but what is important right now is restoring rider confidence. We have proven that touchless systems help to do this.”

Looking forward, ZED Digital is exploring other venues that might be able to use their technology, including the hospitality and entertainment industries. “Our customers appreciate our innovation during these times,” Jagannath said.

“With COVID, we are trying to stay with the times and bring out innovations to help restore the confidence of customers across venues.”

Fresh Air In 2014, the Lexington Medical Center in West Columbia, South Carolina, partnered with Dynamix Engineering on a $400 million expansion and renovation project that added 250 beds, including 60 critical care and 100 step-down, to the hospital and renovated many existing features.

Eugene Griffin, Dynamix Engineering

Dynamix Engineering Ltd. incorporated positive and negative air pressure capability into hospital rooms that can keep viruses outside the rooms or inside the rooms at the Lexington Medical Center in West Columbia, S.C.

CEO and Principal-in-Charge, said that during the design phase of the project, Lexington Medical was insistent on going beyond industry standards and creating a state-of-the-art facility.

“Lexington Medical Center looked at how they might respond to major natural disasters and outbreaks of disease. They looked at what would happen if there were a major flu outbreak.

What could they do to protect their staff, patients, and visitors?” Griffin said. “They had the foresight that many hospitals are only now starting to think about.”

Because the air in buildings is often a vector for disease transmission, Dynamix designed a flexible airmanagement system that can create positive and negative pressure rooms.

With a positive pressure room, slightly more air is supplied to a room, creating higher pressure inside and keeping air from the hallways from entering. In a negative pressure room, slightly less air is supplied to a room that keeps contaminants inside the room.

What sets Lexington Medical Center’s system apart, Griffin explained, is the hospital’s ability to create either option with the flip of a switch, thereby increasing and decreasing the number of either environments and responding to the crisis at hand. With COVID-19, that means the hospital can significantly increase its negative pressure rooms and help contain the spread of disease.

Additionally, the system includes HEPA filter racks and the ability to switch air handling units into outdoor air “purge” mode. “The flexibility this system provided allowed Lexington Medical Center to quickly convert entire floors into negative pressure patient rooms, which helped to manage COVID-19 cases,” Griffin said. “This is helping them get through the pandemic, and they are ecstatic for the flexibility our system gave them.”

When lockdown orders started rolling out across the country in March, Griffin and his team were afraid of how it might impact Dynamix. Griffin began daily check-ins with his managers, teams and clients. These check-ins helped / summer 2020

13

his team stay connected and move forward on projects and proposals.

Additionally, he set up lunchtime video meetings with clients to chat about how they were doing and what projects they were working on. Griffin shared the success experienced at Lexington Medical during these conversations, often leading to a discussion on how a similar system could be implemented on their projects. “Communication was our secret to success,” Griffin said. “We were all stuck at home, but we could still have lunch or coffee together and reconnect. These conversations have opened many doors for us.”

Fascile developed mobile application technology to eliminate paper transactions in the dump truck hauling and trucking industries to reduce interpersonal contact and streamline payment processing.

14

/ summer 2020

Weighing In Paper documents and records are other ways that COVID-19 potentially can spread. Mettler-Toledo and Fascile (www.Fascile.com) propose that eliminating paper tickets used for job tracking in the trucking and construction industries also can slow disease spread while at the same time increasing efficiency.

Don Gattis, CEO of Fascile, said that COVID-19 has accelerated developments in blockchain technology that allows for contactless, paperless transactions. “COVID-19 expedited the digital payments and blockchain technology that is revolutionizing the way business is done,” Gattis said. “Cash, checks, tickets, invoices, and other papers involved in the current system are quickly being replaced with contactless, secure digital transactions.

Fascile is a leader in providing these services worldwide.”

Fascile’s technology integrates with the Mettler-Toledo scale, the largest weigh station in the world, and its Databridge application – allowing for seamless and contactless digital transactions and recordkeeping.

Fascile also has payment flexibility, accepting payments via PayPal, Cash App, Venmo, direct deposits, or cryptocurrencies.

All records are maintained on a blockchain, and each company’s transaction information is sent instantly, eliminating the need for paperwork.

This cloud-based solution requires no hardware, infrastructure, development, or support, meaning companies can be up and running with Fascile quickly and can benefit from improved accounting and payment processes.

Fascile is implementing its solutions with projects around the world, including the Chesapeake Bay Tunnel project and Hampton Roads Bridge Tunnel Expansion Project. The company is also preparing to offer technologies that utilize 3-D printing, cloud computing, IoT, and more.

Gattis, Griffin and Jagannath all emphasized that positive change lies within this pandemic, providing all industries an opportunity to improve processes and systems. “Throughout history, innovation has always overcome the challenges that face us,” Gattis said.

“I would advise all companies, large and small, that if they work together and treat everyone with respect and kindness, they can bring the technology of the future to the present.”

WANT MORE? Check us out at:

www.AmericanDBE.com

More of the info you need from the source you trust.

400+ Firms mentored by Austin have received contracts exceeding $3 billion.

Austin Commercial is committed to recognizing, embracing, and supporting workplace diversity. As a construction industry leader, Austin takes pride in creating minority economic opportunities.

www.austin-ind.com

/ summer 2020

15

Feature

Bias in Supplier Diversity

T

he impact of COVID-19 has fundamentally shifted the business landscape, causing growing uncertainty for most industries; and the engineering and construction (E&C) marketplace is not exempt. While projects are beginning to come back online, construction managers are struggling to fill jobs. Contractors are experiencing challenges in accessing a steady labor force due to growing fear among workers of contracting the virus. Many employees receiving unemployment benefits feel that coming back to work does not make financial sense given the uncertainty of future wages.

Numerous projects are being delayed, leading to challenges with cash flow and payments to employees and contractors.

By Kurt Merriweather

market conditions. Given this reality, E&C organizations should invest even more heavily in supporting supplier diversity programs. However, supplier diversity activity may be reduced as organizations recalibrate key initiatives in the face of pandemic-fueled changes.

The reason for this is due to bias.

Bias is disproportionate weight in favor of or against an idea, person or thing; usually in a way that is closed-

by the human brain, making quick judgments and assessments of people and situations – also influenced by background, cultural environment and personal experiences.

Biases within an organization create missed opportunities when people make decisions that are not objective and potentially contribute to a distrustful culture that will rob it of competitive advantage. An example of unconscious bias in a supplier diversity context is dismissing new solutions to problems because they do not fit the typical way solutions are presented. A study done

by The Hackett Group shows that procurement organizations that embrace supplier diversity are able to generate up to 133% higher return on their investments versus organizations that don’t.

In addition, construction managers are dealing with Unconscious bias represents social stereotypes about certain groups an uptick in internal human of people that individuals form outside their own conscious awareness. Organizations that do not resources disputes involving have a robust supplier the general workforce, diversity program are craftsperson or subcontractor due to minded, prejudicial or unfair. People missing opportunities to strengthen increasing uncertainty related to health, may develop biases for or against their overall brands with customers. A safety and the COVID-19 recovery an individual, a group or a belief. recent study done by Hootology, using timeline. With the rise of workplace Conscious bias, or explicit bias, its Supplier Diversity Impact Indicator tension, it is inevitable that the impact of refers to the attitudes and beliefs (SDII), found that among those who bias will begin to impact the prospects held about a person or group on a are aware of UPS’s supplier diversity of diverse suppliers. History shows that conscious level. Unconscious bias, initiatives, they are 86% more likely to diverse suppliers experience the brunt also known as implicit bias, refers to use UPS’s services than those who are of economic shifts as access to capital the attitudes or stereotypes that affect not aware. tightens. This phenomenon forces understanding, actions and decisions in diverse suppliers to be resourceful and an unconscious manner. It is a bias that The key question to ask is how innovative in order to withstand difficult happens automatically and is triggered companies can reduce the impact

16

/ summer 2020

of unconscious bias that could limit the focus on supplier diversity in organizations? In particular, what is the best approach to address biases that limit an organization’s ability to make sound business decisions, particularly

41

in the area of supplier diversity? The first thing that must be done is to make the unconscious, conscious through education. It is critical to help members of an organization develop a mindset shift that embraces identifying and understanding biases so that they can

Steps to Combat Unconscious Bias in Supplier Diversity

Gather facts. The key element of eliminating bias is to make data-based decisions rather than relying on gut, intuition or conjecture. This is particularly important when evaluating relationships with diverse suppliers. This requires creating a process that allows relationships with diverse suppliers to be measured like any other partnership. This should go beyond tracking diverse supplier spend and the number of relationships in order to evaluate the true relationship impact. Key metrics that should be evaluated include: • • • •

Cost savings realized through the partnership New revenue opportunities created via partnership New ideas created through the partnership Engagement of the partner within organization

When data is collected on the success of supplier diversity that is at this level of depth, there is a much better connection to business value.

2

Create a structure for evaluating the supplier diversity program. Define clear criteria to evaluate the merits of diverse supplier relationships and use them consistently.

Using consistent standards can help to reduce bias.

For example, create a supplier diversity partnership guide that can be used to objectively evaluate the organization’s current program and the effectiveness of all current and prospective suppliers’ relationships.

WEConnect International has developed a tool that includes the following elements to guide program evaluation: • • • • •

be confronted and addressed. Next, the organization must examine the policies, practices and structures that cultivate bias. This systemic evaluation is not a one-time initiative, but rather, an ongoing process.

Policy Assessment Planning Processes and Standards Measurement, Tracking and Reporting Accountability

3

Be mindful of subtle cues. When meeting with diverse suppliers or attending recruiting events, be sure to be fully engaged. Invite diverse suppliers to events where all suppliers or partners are present including after-hours events. Be sure that communications who are sent to partners are also sent to diverse suppliers. This intentional inclusion will help to create higher levels of engagement with diverse suppliers and increase the likelihood of success.

4

Foster awareness. In day-to-day interactions, be sure to hold yourself—and your colleagues— accountable. The key to identifying blind spots is to raise questions and opinions when key decisions are being made. For example, Google created a “bias busting checklist” to eliminate snap decisions and mitigate the consequences of unfair judgements.

This same approach can be applied to interactions with diverse suppliers. When evaluating supplier diversity performance and putting together interventions to help build capacity, here are few questions or areas to address to identify blind spots in evaluation: • • • •

Consider concrete examples of performance throughout the evaluation period Consider situational factors that affected performance (e.g. lacked access to resources or information) Consider if rating would change if supplier was in different cultural group Be an advocate for diverse suppliers in which you are invested

/ summer 2020

17

What Can Diverse Suppliers Due to Counteract Unconscious Bias?

While supplier diversity is increasing in importance for many organizations, diverse suppliers are continuing to experience challenges in getting connected to companies. In a recent report by CVM Solutions, diverse suppliers described challenges navigating portals and the application process required by many organizations. This creates resistance when trying to identify and pursue new opportunities. The report also highlighted the benefits that supplier diversity can deliver to partner organizations – workforce impact and interaction, supply chain impact, and ultimately increasing the diversity of the partner’s workforce. The next installment of this series will highlight an organization that has counteracted unconscious bias to create success.

18

/ summer 2020

Kurt Merriweather is VP, Strategy and Transformation at Walk West, a Raleigh, North Carolina-based marketing firm. Walk West recently launched The Diversity Movement to help organizations create lasting business value from Diversity & Inclusion (D&I) practices. For more information, please visit thediversitymovement.com or send email to: info@ thediversitymovement.com

SEEKING DIVERSE SUBCONTRACTORS & CONSULTANTS

FOR THREE INFRASTRUCTURE PROJECTS FAM Construction, LLC

Transform 66 Outside the Beltway, Northern Virginia

This project will transform 22.5 miles of Northern Virginia’s Interstate 66 between I-495/Capital Beltway and U.S. Route 29 in Gainesville, VA into a multimodal corridor.

The $2.3 billion design-build project will build two new express lanes alongside three general purpose lanes in each direction; auxiliary lanes where necessary, major interchange improvements, new expanded park and ride lots with more than 4,000 spaces, and multiple segments of a corridor-wide shared use path.

Contact dbeinfo@fam66.us for contracting opportunities or more information

North Perimeter Contractors, LLC

Interstate 285/SR 400, Atlanta, Georgia North Perimeter Contractors (NPC) was selected by the Georgia DOT and the State Road and Tollway Authority to design, build and partly finance the I-285/SR 400 project.

The contract sum is approximately $457 million. NPC will rebuild the I-285/SR 400 interchange and make upgrades to the adjoining I-285 and SR 400 corridors.

Contact npcdbeinfo@ferrovial.us for contracting opportunities or more information

Grand Parkway Infrastructure

Texas SH 99 Grand Parkway Segments H, I1 and I2, Houston, Texas The Great Hall project consists of upgrading the Jeppesen terminal at Denver International Airport, encompassing over 700,000 square feet of floor space. The upgrades include creating new shopping and foodservice areas, relocating and expanding the TSA screening areas, improving building access and passenger flow, creating a new check-in area, and optimizing space and efficiency in the terminal.

Contact info@gpi-99.com for contracting opportunities or more information

POTENTIAL CONTRACT OPPORTUNITIES* Barrier/Guardrail, Bridge Construction, Aggregate/Material Suppliers, Erosion Control/SWPPP, Concrete Structures, Drainage, MSE Walls/ Panels, Noise Walls, Misc. Design Services, Misc. Utilities Services, Traffic Control, Drilling (Sign Posts/Caissons), Utility Relocation Design**, Rebar , Flatwork, Electrical Work, Demolition- Exterior, Grading/ Earthworks, ITS and TCS Civil Work, Landscaping, Materials Testing, Lighting, Saw Cutting/Sealing, Striping, Steel Stud Walls, Utility Relocation**, Recycling/Milling, Paving, Excavation, Environmental, Geotechnical, Fencing, Misc. Concrete Work, Technical Design Engineering, Signage, Surveying, Ready-mix Concrete, Traffic Supplies/Signals, Trucking/ Hauling, Terrazzo, Masonry, Finishes (Tile, Carpet, Resilient Flooring), Framing, Drywall, Specialty Ceiling. *PLEASE NOTE: This list is not inclusive of all available opportunities, but a sampling of potential services that could be available on a project.

The opportunities available on specific projects may vary depending on the type, scope and size of the project. ** Additional pre-qualifications may be required for these services.

Contact the email address for each project listed above for specific contracting opportunities.

However, for general questions about the Ferrovial Agroman Diverse Business Program email DBEinfo@ferrovial.com / summer 2020

19

Feature

Standing in the AACCNJ TAKES ACTION During the Pandemic

GAP information to more than 800 members located in New Jersey and across the nation. The agency is a registered 501(c)3 and uses its nonprofit status to promote greater opportunities for African American businesses in the state. “We’re an advocate for black business and we make no apology for that day-in and day-out,” Harmon said.

African American Chamber of Commerce of New Jersey staff: Mary Griffin, VP, Membership Relations; Jacqueline Baptiste, Executive Assistant to the President & CEO; John Harmon, President & CEO; Noelle Baptiste, Marketing Manager; and Nicole Baptiste, Membership Relations and Special Projects Manager.

(Photo by Photoray Photography)

The African American Chamber of Commerce of New Jersey (AACCNJ) demonstrates the role business support and assistance agencies across the country are playing to help companies make it through one of the most challenging times in recent history. AACCNJ is working during the COVID-19 pandemic to serve as a connecting force between business owners and the resources available to

20

/ summer 2020

help them survive the current economic environment; and to prepare for a new normal as the country slowly emerges from the current health and financial crisis.

“When America gets the flu, black folks get the coronavirus,” AACCNJ Founder, President and CEO John Harmon Sr. said. Harmon has led the agency for the past 13 years and focuses its mission on providing resources, opportunities and

AACCNJ has nine full-time staff members providing a variety of services to help businesses in the state succeed and contribute to economic growth in the region.

Services include access to capital assistance, technical assistance, education programs, business development assistance, and also networking programs.

SBA PPP and EIDL Assistance Since the beginning of the pandemic, AACCNJ has helped more than 200 businesses complete the application process for the Small Business Administration’s two loan programs offered as part of the federal government pandemic relief package. Harmon, a former banker, has dedicated two staff members to working solely on helping

businesses prepare loan packages for the SBA Paycheck Protection Program (PPP) loan or Economic Injury Disaster Loan (EIDL).

corporate, federal, state and local opportunities. It’s about realizing the significance of relationships because relationships matter.”

“We were tapped by the New Jersey Economic Development Authority for a contract to work with businesses, many of which were not being entertained by their existing financial institutions,” Harmon said. AACCNJ staff helps businesses complete applications and reviews the information before submitting it to banking institutions or the SBA for processing. This additional review helps decrease application delays due to missing or incorrect information.

Bonding Program Success Another service AACCNJ is providing to small and minority-owned businesses is managing the state’s Small Business Bonding Readiness Assistance Program. The agency entered an agreement with the New Jersey Economic Development Authority in 2018 to administer the program. AACCNJ was a key advocate to state legislators to pass legislation providing funding for a program to help small businesses get prepared to be bondable or increase their bonding capacity. “We lobbied with mayors

information to increase their bonding capacity. Harmon believes the program has been an overwhelming success and says several companies have gained bonding capacity, while others are still working to become bondable. “We had one guy that had a bankruptcy in the past and thought he could get bonding, but after the program he got a bond,” Harmon said.

Currently the bonding program is led

by JSSB Consulting LLC, Founder & Managing Member Joanne Brooks, a surety bonding expert with over 30 years of industry experience. “Joanne and her team have been miracle workers in New Jersey,” Harmon said. “By leveraging her talent and experience, we are making opportunities more accessible, because having a bond is a prerequisite to being able to get on a lot of public projects.”

The agency achieved a significant success rate in getting companies approved during the early stages of the pandemic through working directly with banking institutions that are existing strategic Brooks says the success partners of AACCNJ. “Our of the program is due banking partners were very to the direct personal helpful in assisting us to contact she and her team move businesses through of bonding agents make the various programs with participants in the and get financing to them program. “We always when they needed it,” start off with an interview Harmon said. He credits to find out a business financial institutions like owner’s goals and if Investors Bank, the Credit bonding is what they need Union of New Jersey, right now,” she said. This Peapack-Gladstone process allows the team Bank and Industrial Bank to tailor the educational Participants in the 2018 Small Business Bonding Readiness Assistance for stepping up to help sessions and coaching Program attend a class session. (Photo by Photoray Photography) businesses while some to the specific needs of major financial institutions businesses and monitor were slow to serve small African and government officials for a bonding their success in the program.

American businesses. “We want to be program for 3 to 5 years,” Harmon good partners, so this is about creating said. “Everybody thought a bonding Another strategy Brooks uses is mutually beneficial relationships with program was a great idea, but no one connecting participants in the program our financial institutions. We are making had come up with the money.” However, to business opportunities that can sure our businesses are buttoned-up consistent efforts led to meeting with result from successfully completing the as much as possible to streamline legislators educating them on the program. “We had one paving firm from the process for getting applications importance of bonding to increase Camden get bonded and then win a approved.” opportunities for small and minority paving contract,” Brooks said. However, companies. These meetings finally she also acknowledges the impact the AACCNJ is also successful in helping convinced Democrat and Republican COVID-19 pandemic is having on the business get approved for the EIDL politicians in state government to construction industry and its impact program directly from the SBA. By sponsor a bill for a bonding program, on firms participating in the program.

May, the agency helped 77 firms get which was signed into law by former “It’s a difficult time in the construction approved for financing. “Our strategy Governor Chris Christie in 2018. industry,” she said. One bright spot is to help businesses get funding through an upcoming $500 million consolidated the SBA loan programs is the same AACCNJ was picked to administer rent-a-car facility a joint venture team process used to help businesses the program and is now in the second – of Austin Commercial Inc. and VRH get contracting opportunities with year of giving businesses the tools and Construction Corporation – is building / summer 2020

21

PROUD TO GIVE BUSINESSES A LIFT CATS is proud to provide opportunities for businesses to create local jobs through the advancement of transit projects. CATS also seeks to create an environment that gives small and socially or economically challenged local businesses the opportunity to compete for publicly funded contracts by participating in the Small Business Opportunity (SBO) and the Disadvantaged Business Enterprise (DBE) Programs.

On the LYNX Blue Line project, for example, CATS spent $42.9 million with 38 DBE firms to build the new light rail system.

As the major provider of public transportation to Charlotte and the surrounding region, CATS relies on the communities we serve to build and operate the service every day. By working together on these new opportunities, we can all keep our communities moving in the right direction.

For more information, visit ridetransit.org.

22

/ summer 2020

at the Newark International Airport.

Austin Commercial representatives have attended sessions on the bonding program to talk with firms about upcoming opportunities on the project and hope to utilize some of the firms as work proceeds this year.

entrepreneurs, political leaders and business professional offering insight and guidance to business owners on how to succeed during the pandemic.

Harmon believes these sessions help business owners feel connected during this period and realize that they are not alone in facing the current challenges.

Sharing Important Information AACCNJ also has ramped up its online training and communications services during the pandemic to keep businesses informed on resources and strategies to move through the business shutdown and health challenges during the first half of 2020. New webinars using the Zoom virtual meeting platform have allowed business owners to participate in sessions like COVID-19 Relief Initiatives, Stories of Survival during COVID-19 and Re-Engaging Your Workforce During COVID-19. These informational sessions have featured

Helping Small Business Move Forward

AACCNJ members believe all these services help prepare and connect companies through mutually beneficial business relationships with private and government buying organizations across the state. “Our conversation with corporations and government entities is that through diversity there should be value proposition derived,” Harmon said. “We tell them if they are not using black and brown businesses in their supply chain or as partners in business, they are marginalizing their outcome.

Because when the playing field is level, we outperform everybody else.”

AACCNJ President & CEO John Harmon makes remarks at the 2019 Corporate Awards Dinner. (Photo by Photoray Photography)

How We Help • • • • • •

Bonding Education Program Women & Girls in Transportation Initiative DBE Certifications Procurement Assistance Capital Access Program Counseling and Technical Assistance

South Atlantic Region

DC Metro Area • Kentucky • North Carolina • Virginia • West Virginia

For additional information contact: Alyssa Mako, Project Director amako@TheInstituteNC.org (919) 956-2331 U.S. Department of Transportation Small Business Transportation Resource Center

www.TheInstituteNC.org

/ summer 2020

23

DBE POWER PLAYER

Yerba Buena

Comes Full Circle

It has been a long and winding road

to Success

up to be. So, he decided to revisit his goals and determine the optimal size for the company for profitability, the president and founder enjoyment and happiness for his family of Yerba Buena Engineering and employees. This revelation allowed and Construction, to find ultimate Galarza to step back, re-assess and success for his company. The road has reorganize the company for optimum taken him from humble beginnings in efficiency and even greater success.

2002 as a small startup construction “I had to think about why I was doing firm in San Francisco to it – was I doing it for the people achieving award-winning who work with me in the success while growing company or for my the company to ego,” Galarza said. sales of more Galarza began than $30 million. a strategy of During this time, scaling back his company the company to completed the streamline its Small Business services and Administration to reduce its 8(a) Business market area 100 Development miles from the Program and home office in San exceeded the DBE Francisco. While this Program size limits to change resulted in less “graduate” from the revenues, profitability Miguel Galarza, founder and program. This level soared. “It’s not about president of Yerba Buena of growth came with the gross, it’s about Engineering & Construction. opportunities to open the net,” Galarza said. satellite offices in “I found that we are cities like San Diego, making more money at California, and Salt Lake City, Utah, in $7 million than we were at $30 million.” the process growing to more than 125 The change also made his employees employees and working in a variety of happier to stay close to home and not industry sectors. have to live away while completing jobs However, at what seemed like outside of the greater San Francisco the peak of the mountain, Galarza area. Galarza remembers that traveling recognized that his goals were to complete projects in other areas was changing and that running a company exciting at first, but as he and his team of this size was not all it was cracked members got older, the excitement of

for Miguel Galarza,

24

/ summer 2020

being on the road was not the same.

Yerba Buena’s business now focuses on providing civil and heavy construction services to government agencies around San Francisco.

Approximately 90% of the business is construction and the other 10% is engineering services for construction projects. The company has built a strong niche in designing and building urban trails for clients like the National Park Service and other municipalities.

“Our jobs are a little more artwork than construction, because we are working within the parameters of the landscape and determining how we can facilitate bringing the public into space so that it is an enjoyable experience,” Galarza said.

One of those projects is a current federal Hub Zone contract with the National Park Service to restore walking trails leading from the back of the Fort Mason National Park to the Ghirardelli Square and Fisherman’s Wharf area.

The park is the site of a former U.S. Army Base that sits on a mountain overlooking the Pacific Ocean, and the walking trails were once used by soldiers to move down to the shore. The trail has become dangerous over the years due to noxious weeds overgrowing the passage, broken concrete in the walkway and stairs, and damaged

walls. Yerba Buena is restoring the trails by restoring the landscaping, building a new walkway, and installing ornamental railings and stairs. “It’s a showcase project and one of those jobs that your grandkids will say ‘my grandad did that job’” Galarza said.

Galarza named his company Yerba Buena to acknowledge the history of the San Francisco area and to identify his ultimate mission for the company.

“Yerba Buena–loosely translated–means good grass,” he said.

“This was the name the original Spanish settlers gave to the area when they landed here because of the minty effervescence of the mossy grass that grew on the shore.”

Galarza says he wants his company to be Yerba Buena staff perform outfall construction at Crissy Field Presidio of San Francisco. known for turning bad landscapes (bad grass) into great landscapes (good grass) AGC’s Diverse Business Enterprise of Galarza attributes much of the to live up to the meaning of the the Year for its ongoing success and its success of Yerba Buena to a strong company name. long-standing commitment to Diversity team of employees who are committing As the company has found its optimal and Inclusion. to doing business the right way and place in the market, Galarza has created the time to give back to the industry and especially to other Hispanic businesses that are seeking success.

He served as a mentor for the Stanford University Latino Business Initiative Education – Scaling Program; a program with the mission to empower Latino entrepreneurs to build billion-dollar businesses. Galarza participated in the program’s onsite executive education program for Latino businesses in 2017 and has remained involved through membership in the Latino Business Action Network (LBAN).

Yerba Buena is an active member of the California Chapter of the Associated General Contractors, and Galarza is a current member of the AGC of America’s Diversity and Inclusion Committee. He Yerba Buena team members complete emergency ductbank installation on joined the national committee in 2018 The Embarcadero for the San Francisco Municipal Transportation Agency. after Yerba Buena was honored as / summer 2020

25

giving back to the community. “I share with the team the importance of turning square corners and not rounding off the corners,” Galarza said. “Although you may make less money and everything is not always win-win, you are able to go to sleep at night and you don’t have to worry about a knock on your door.”

It is this commitment to doing business with integrity that has allowed the firm to maintain an extremely low turnover rate and allowed employees to grow with the company. “Many of my team members have been with me for many years and have grown with the company, so I do this not only for me and my family, but for them as well,” Galarza said.

The growth and success of Yerba Buena has been a dream come true for Galarza. The dream started when he was 18 years old and working as a laborer in the construction industry.

During his morning breakfast he read a newspaper article about a Latino firm from San Francisco being selected as contractor of the year and it gave him an idea that maybe one day, he could also build a successful contracting firm.

“That planted a spark that maybe I could do that one day,” he said. Although it took several years before he was ready to launch Yerba Buena Engineering & Construction, the newspaper article made the dream seem possible for a young Hispanic man.

With his dream fulfilled, Galarza is now focused on preparing the next generation of the Yerba Buena team to take the firm into the future. His daughter is a rising leader in the company, and other long-time team members have grown to greater responsibilities in the company. This type of growth and success makes Galarza even more proud than the accolades Yerba Buena received for being one of the fastest growing companies in America. These accomplishments bring greater profitability and greater fulfillment.

He hopes this also will inspire other Latino-owned companies to follow his example.

Yerba Buena team members stand outside company headquarters in San Francisco.

Visit www.AmericanDBE.com

26

/ summer 2020

Integrity

Transparency

Service

Law / Public Policy Consulting Disparity Research / Disparity Studies Supplier Diversity Program Management

/ summer 2020

235 Peachtree Street, N.E. | Suite 400 | Atlanta, Georgia 30303 | Phone: 404-584-9777 | Fax: 404-584-9730 | GSPClaw.com

27

PROGRAM SPOTLIGHT

Disparity Studies Provide Evidence to Confirm Contracting Inequalities Remembering the Impact of Atlanta’s First Disparity Study on Policies to Support Minority Business

By Marcus K. Garner

Black Lives Matter: Now that this important, but painfully underappreciated truth has been reaffirmed and reinforced, the DBE community now can dive into celebrating the continual progress for minority businesses in Atlanta and across the country.

I

nclusion policy in government procurement and hiring practices is not uncommon in many local and state agencies. However, without the work (from 30 years ago) of an Atlanta team proving that disadvantaged businesses even needed support, such programs might not exist.

In June 1990, the Brimmer-Marshall Study provided evidence supporting a Minority Business Program in the City of Atlanta – designed to create opportunity for black-owned and Hispanic-owned businesses to contract with the City. The groundbreaking work, led by economists Andrew Brimmer, the first black governor of the Federal Reserve; and Ray Marshall, President Jimmy Carter’s former Labor Secretary, was called a ‘Disparity Study,’ and was the catalyst for a cottage industry that has kept Affirmative Action programs going to this day. Further, it helped to galvanize the legacy of Mayor Maynard Jackson’s efforts in Atlanta to include minority enterprise in the fabric of the city’s business.

28

/ summer 2020

In June 1990, Dr. Ray Marshall, Dr. Andrew Brimmer, former Atlanta Mayor Maynard Jackson and former Atlanta City Council President Marvin Arrington marked the presentation of the Brimmer-Marshall Disparity Study to the Atlanta City Council at Atlanta City Hall.

“But for the Study, minority programs wouldn’t have had market access in a whole host of industries,” said Thomas “Danny” Boston, a member of the team of economists, researchers, labor experts and attorneys who worked on the study. Through the early 1980s, public minority programs created so-called “set-asides” that required vendors and contractors doing business with government agencies to allocate a percentage of the tax dollars paying for goods or services to minority- or women-owned businesses in an effort to reverse previous discrimination.

The U.S. Supreme Court Decision

in City of Richmond vs. J.A. Croson, 488 U.S. 469, determined in a 6-3 ruling that the program was unconstitutional because it violated the 14th Amendment. The ruling stated that “generalized assertions” of historic racial discrimination were not enough to justify racially based quotas for awarding government contracts. In her majority opinion, Justice Sandra Day O’Connor wrote that the Richmond program that set a 30-percent minority hiring mandate, “provides no guidance for the city’s legislative body to determine the precise scope of the injury it seeks to remedy, and would

allow race-based decision-making essentially limitless in scope and duration.” The decision rendered such programs vulnerable to legal challenge, requiring what is known as strict scrutiny – a requirement of compelling interest and strict tailoring.

Any government wanting to consider the use of race-based hiring must demonstrate strong evidence of the need to resort to race-conscience programming. And even if the history is present, the remedy to that history must be specifically tailored to said history.

“Many were forced to shut down right away,” Boston said. “They weren’t able to show factual predicate that would hold up in court.”

In short, affirmative action programs needed to prove statistically that the group they were trying to help exists in the marketplace, that they have the capability to do the work, and that they are willing to do the work.

The American Subcontractors Association tested that vulnerability in Atlanta by suing the city. “We were fortunate in that the leadership of Atlanta was not like a lot of other cities and didn’t just fold under the pressure of lawsuits,” said Sue Ross, who heads the City’s business development program and worked on the Study team under Marshall and Brimmer. “The tradition of Maynard Jackson that has continued through time was that Atlanta would have a robust inclusion program. Some people call it ‘the Atlanta Way.’” Prior to the Croson ruling, when Jackson came into office in Atlanta, the city was 70 percent black, but fewer than 1 percent of the city contracts went to minority and female firms. “It was the ‘Good Ole Boys’ club for the majority of the businesses in Atlanta,” Ross said. Under Jackson and beyond, “the position of the city was that we were going to ensure equal economic opportunity in employment and hiring.”

Attorney Rodney Strong was hired by Jackson into this tradition. At the time of the Croson decision, Strong was Contract Compliance Officer for the City of Atlanta under Mayor Andrew Young, and helped assemble that first disparity study team. He said opponents of affirmative action seized on the opportunity to end set-aside programs across the country following the Croson decision.

“There would have been virtually no vehicle that would have allowed African American, Asian, and Hispanic businesses to compete for government contracts,” Strong said. “What makes the Brimmer-Marshall Study so remarkable is that people in the Atlanta group looked at it and said we believe

not the case.” One example of that was an examination of Atlanta construction magnate H.J. Russell & Co., founder Herman Russell. “Prior to the minority business program he was only able to build residential at the time because of the climate,” Boston said. “After Atlanta’s anti-discrimination program, he was

In 1990, former Atlanta City Council President Marvin Arrington, Dr. Ray Marshall, Dr. Lenora Cole Alexander, Dr. Lucy Reuben, Dr. Andrew Brimmer, former Atlanta Mayor Maynard Jackson and Rodney Strong collaborated to complete Atlanta’s first disparity study.

we can meet the test of strict scrutiny.”

Boston said the start of the plan was to give credibility to the team. Recruiting Marshall, at the time an economics professor at the University of Texas – and a white man – and Brimmer provided national clout.

Boston, a retired Georgia Tech professor, was one of the researchers on the program, and worked on gathering the statistical records.

“We had to go to warehouses to collect boxes and boxes of data,” he said, pointing to the large amount of information only available at the time on paper. He said before collecting the data, many characterized most Blackowned businesses as not being up to the task of doing contracting work with the city.

“One of the things that struck me most was that the standard perception of minority firms was that they were marginal … just a bunch of ‘mom-andpop’ operations,” Boston said. “We were able to document that that was

able to go beyond building houses and churches in just black communities.”

Alford Dempsey, now a Superior Court Judge for Fulton County in Atlanta, and then Atlanta City Attorney Marva Jones Brooks were among the lawyers brought onto the team. Franklin Lee, of the Minority Business Enterprise Legal Defense and Education Fund, was also part of the legal team. He led the gathering of anecdotal data – that is, a collection of personal accounts through interviews, public hearings, focus groups and surveys – that breathed life into the statistics that economists reviewed.

“One of the things that was very eye-opening in the Atlanta study was the overt discrimination by the banking industry against minority contractors gathered through interviews where we asked white and minority contractors what their experience was in getting started,” Lee said. “Almost to a T, what we heard was that the banks were a joke. They told people if they wanted a / summer 2020

29

line of credit, they had to give a certified statement showing they had an equal amount of money available,” he said.

When questioned by the Study team about the same experience, white business owners were surprised by what they heard. “They looked at us like we were crazy,” Lee said.

In their research, Lee said the team identified what he called the “dirty dozen” forms of discrimination.

Former Atlanta Mayor Andrew Young and Rodney Strong speak during a February 1989 press conference at Atlanta City Hall to announce the commissioning of the Brimmer-Marshall Disparity Study.

Among those indiscretions were, unequal access to capital, bonding and insurance, stereotypical attitudes, adhering to price discrimination by suppliers, unnecessarily restrictive contract specifications, overt racial animus on the work site, and bid shopping.

The combination of statistical and anecdotal evidence was enough to preserve Atlanta’s anti-discrimination program and set a precedent nationwide. The Atlanta Constitution’s editorial page even went so far as to identify the harm that legal action akin to the Croson decisions had done to the national work to redress unfair hiring and contracting practices.

“The apologists for those rulings are being proven wrong. The decisions have hurt the efforts to end discrimination in the workplace and to open economic opportunities from which blacks and other minorities have historically been shut out,” the editorial board published. Beyond saving affirmative action programs from a wave of legal action aimed to wipe them out, the Brimmer-Marshall Study helped to systematically fortify the programs.

“These programs have survived for 30 years after the Supreme Court made a ruling that could have been a death knell for anti-discrimination programs,” Strong said.

Boston said the modern-day Disparity Study has evolved to respond to new legal challenges. “Over time, as these programs were challenged, the challenges became more focused,” he said. “Those (methods) that are used today are those that withstood some challenge; eventually, evolved the regression analysis and now you have a control for experience and education.”

Strong runs Griffin & Strong, P.C., an Atlanta-based public policy consulting firm that specializes in disparity studies, and Lee has recently retired from doing similar consulting work.

As the United States reconciles with the latest in a series of black deaths at the hands of an unfair judicial system, Lee said this environment requires ongoing work to even the odds for minorities. “There continues to be a strong need for disparity studies,” he said. “There continues to be persistent business inequality in contracting and procurement.”

Capacity builders advocating for contractors nationwide.

410.876.9610 • thebarbourgroup.com 30

/ summer 2020

AIRPORTS

Airport Industry Begins Recovery After Decimation by Pandemic Terminal 2 at the Raleigh-Durham International Airport sits almost vacant in July 2020 as many airports have experienced a record-level reduction in air travel since the start of the COVID-19 pandemic.

“By far, 9/11 was a walk in the park by comparison. William “Bill” Swift, president of Business Traveler Services, Inc,. said when reflecting on the current state of the airport industry.

“The reason is that 9/11 affected the airlines, airports and air travel directly.

Unlike this – this impact is ubiquitous.

Every aspect of our lives is being affected,” he said.

Swift is an industry veteran, who began working with airport industry businesses in the 1970s as a special assistant to Atlanta Mayor Maynard Jackson and then as director of procurement for the city. Mayor Jackson charged Swift with

making sure minorities and women had a greater opportunity to do business at the airport and to strive to meet a goal of 25% participation of minorities and women in airport contracts. Swift experienced the evolution of the DBE and ACDBE Programs over the years and has lived through challenging times in the airport industry; but none quite like this.

After a successful career in city government, Swift moved further into the airport industry by joining the Dobbs-Paschal Midfield Corporation as director of operations. DobbsPaschal had just won a 15-year contract to operate the entire concessions program at the Hartsfield-Jackson Atlanta International Airport. The team represented one of the first airport industry joint ventures between a nonminority firm, Dobbs House Inc., and a minority-owned firm, Paschal’s Foods Inc.

These industry experiences gave Swift the skills and knowledge to go into business for himself when the DobbsPaschal contract ended in 1994; and his newly-created Business Traveler Services firm won several concessions packages to operate two golf stores, two sports stores, a TGI Fridays restaurant and business services concessions at the Atlanta airport. Over the years his business grew to have contracts in several airports across the country, but today he maintains contracts at the Atlanta airport and at New York’s LaGuardia International Airport.

After 26 years in business, Swift sees the industry at the most challenging time since he first began during the Mayor Jackson administration. “Our social life, our business life, the economics of the country are all being affected,” he said. “This is well beyond 9/11, and 9/11 was a real kick in the pants.” / summer 2020

31

AMAC’s ‘Save the Travel Experience’ Swift is former chair and a longstanding board member of the Airport Minority Advisory Council (AMAC).

In response to the COVID-19 global pandemic, AMAC is leading efforts to minimize the devastation minority- and women-owned firms are experiencing in the industry by providing resources and training to businesses; and by sponsoring an initiative called ‘Save the Travel Experience.’ The initiative is an advocacy and promotional effort to encourage Congress to include airportrelated businesses in future rounds of Coronavirus pandemic relief packages to help airport-related businesses survive the economic downturn resulting from stay-at-home restrictions and the widespread health concerns about the safety of being in public spaces.

Save the Travel Experience launched a website just weeks after the steep decline of airline travel in early March featuring videos from airport business operators sharing the impact of the pandemic on their operations and imploring federal legislators to consider a relief package to companies that are essential to an airport passenger’s travel experience.

“Our members are suffering tremendous sales losses exceeding 50% and in some cases as high as 90%,”

former AMAC Chair John Clark, stated in a press release. “The industry is facing a major financial crisis. Many businesses – including those classified as small and/ or disadvantaged – may not be able to continue operations.”

AMAC joined forces with the Airport Restaurant & Retail Association to urge Congress to take immediate steps to help airport businesses. The organization also urged airport agencies to help their concession operators in the three ways: •

Waive rent, other fees and the imposition of penalties for at least six (6) months with the opportunity to extend depending on the extent and impact of the crisis.

•

Suspend and defer concessionaires’ capital investment requirements.

•

Provide operational flexibility including, but not limited to: adjustments to operating hours, locations, and menus/product selections, as well as selective temporary closing of stores and restaurants to better align with passenger volumes and flows and to reduce the negative impact on employees.

Although Congress has yet to move forward to create relief package for airport businesses, several airports have worked collaboratively with their ACDBE (Airport Concession Disadvantaged Business Enterprises) and large concession operators to modify agreements considering the current economic and societal crisis.

AMAC board member and airport concession operator William “Bill” Swift speaks during a panel discussion at the 2014 AMAC Industry Day program in Washington, D.C. Other panel members pictured are Lynn Boccio of Avis Budget Group and Janus Harden of EJE Duty Free.

32

/ summer 2020

Airports Collaborating with Concession Operators Airports like Dallas/Fort Worth International Airport, Seattle-Tacoma International Airport, Baltimore/ Washington International Thurgood Marshall Airport, Hartsfield-Jackson Atlanta International Airport, and others have worked collaboratively with airport businesses to modify contractual agreements for the long-term success of their business partners.

In Atlanta, Swift has played a key role in uniting concession operators to negotiate with airport administrators to create a win-win solution for both parties. The discussions led to the Atlanta City Council passing an ordinance in early July to suspend minimum annual guaranty (MAG) payments for one year and to calculate lease payments based on a percentage of the gross revenues earned by concession operators.

The modification of concession agreements was necessary due to the unprecedented nature of the current health and economic crisis. “No one anticipated an effect that would impact every airline, every airport, and, oh, by the way, just about every business outside the airport,” Swift said. He believes the only way to successfully emerge from this industry upheaval is for airports to sit down with its business operators to come up with plans that create a mutually acceptable course of action.

“It’s unfortunate that some airports have taken a draconian approach to say, ‘Hey, you have a contract and you have to pay the rent,” Swift said. “But the reality is; hell, we don’t bring a single person to the airport … We are a service operator to provide goods and services to those who arrive.” He believes that the contractual relationship between an airport and its concessions operators is based on the anticipation of the airport bringing a certain amount of traffic – through the air carriers – and that the concessionaire’s responsibility is to service the traveling public, generate revenue, pay rent and to provide the airport with a source of non-aeronautical revenue. “Although airports bend over backwards to say they do not guaranty

the amount of traffic, there is an implicit guaranty that there will be passengers coming through the airport to serve,” Swift said.

Leaders of the Atlanta airport and other major airports across the country have embraced this reality and are working with their respective business partners to endure these challenging times together. “I cannot overstate the role that Mayor Bottoms’ administration played in working out these terms at the Atlanta airport,” Swift said. “They took a very active role in hearing and listening to what the issues were from a concessions perspective, in the context of how we run an airport that has been kicked in the shins in terms of loss of traffic.”

A Starbucks location at the Raleigh-Durham International Airport is closed until further notice in July 2020 because of the reduction of passenger travel since the beginning of the COVID-19 pandemic.

City of Columbia

OFFICE OF BUSINESS OPPORTUNITIES  Commercial Loans and Forgivable Loans Mayor Stephen K. Benjamin

 Technical Assistance Education & Advocacy  Contractor and Supplier Diversity  15% DBE Goal for all City Departments  Mentor-Protégé Program for MBE/WBE Firms  Columbia Disadvantaged Business Enterprise Program

City of Columbia, Office of Business Opportunities 1401 Main Street, 4th floor, Columbia, SC 29201 803-545-3950 or email us at OBO@columbiasc.gov http://www.columbiasc.gov/obo

/ summer 2020

33

TRANSIT

Lewis Leads CATS Through A

Seismic Shift in the Nation’s History

T

he Coronavirus pandemic, societal protests and the economic downturn combined led Charlotte Area Transit System (CATS) CEO John Lewis to label this period “interesting times” in our nation’s history. The unexpected nature of these events has placed the entire transit industry in a state of uncertainty that agencies are just beginning to get a handle on how to adjust. “We are starting to come into the dawn after a long period of darkness where we were wondering how we are going to get through this,” Lewis said in May 2020.

However, what he did not know at the time was that only days later, protests would breakout across the country in response to the death of George Floyd (by Minneapolis, Minnesota, police officers), adding another challenge to what has been one of the most challenging years in history. However, despite these challenges, the agency has maintained viability through these times and continues to offer mobility services to the greater Charlotte region in North Carolina.

CATS is one of the country’s premier transit systems, boasting a successful light rail system and comprehensive bus system in one of America’s fastest growing cities. The agency serves more than 16 million riders a year and maintains 69 different lines of mobility, including a streetcar line and bus rapid

34

/ summer 2020

transit line in addition to its traditional bus lines and light rail service.

Lewis is working to stabilize and reorganize the agency – considering new safety requirements and operating procedures due to the COVID-19

John Lewis, President & CEO of the Charlotte Area Transit System (CATS).

pandemic. One initiative the agency is finalizing is enhanced procedures for cleaning vehicles. “We have already started to clean our buses more frequently by doing a mid-day cleaning instead of only at the end of the day.

We also clean our rail cars at the end of each run during the day,” Lewis said.

New Silver Line Will Bring Opportunity to Small and Diverse Firms Despite the current environment, the agency continues to press forward on its long-term strategic goals to increase

mobility. A key component of CATS long-term plans is the new Silver Line rail project. The proposed Silver Line is a 19-mile light rail route connecting the town of Matthews, North Carolina, to downtown Charlotte, and ultimately to Charlotte-Douglas International Airport. Lewis said, “This project will not only provide more mobility options, but also drives development and helps our community tackle the tough challenge of providing affordable housing.”

The project is in the early stages of preliminary design and engineering.

This involves gaining public input on possible routes for the project and for determining the station locations for the line. Lewis expects this process to take 18-24 months before moving forward to determining funding options for the project. “It’s going to be the biggest project ever in Charlotte,” Lewis said. “The Blue Line Extension, which opened in 2019, was our biggest project at $1.2 billion, and the Silver Line could be 2 to 3 times that amount.”

Lewis believes the project will offer unprecedented opportunities for small and diverse companies in the region.

He said, “Over 100 small and diverse companies worked on the Blue Line Extension, earning more than $75 million; and the Silver Line will offer much greater opportunities for these businesses to get involved.” Lewis is aware that the sheer size of the project will give CATS a unique opportunity to

The CATS Lynx Blue Line travels through Charlotte near the Bland Street Station in 2012. The rail line has sparked significant transitoriented development along the route and CATS expects even greater development when a new Silver Line is completed in the region. (Credit: Prasit Frazee)

have a major impact in the community as it also helps mobility in the region.

“I am a mobility provider, and my job is moving people efficiently and effectively; but I also realize the impact we have on the community,” Lewis said. CATS maximizes its impact on the small and minority business community by striving to design good projects for businesses to participate in, and then working with the City of Charlotte’s Business Inclusion Program to create outreach programs to connect with small and diverse companies interested in doing business with the agency.

opportunities to break procurement opportunities into smaller contracts to give diverse businesses the chance to participate. “For instance, the Business Inclusion Team helped us identify opportunities in our cleaning contract,” Lewis said. “We used to have one big contract for our stations, vehicles and facilities, but we were able to break that contract down into separate opportunities and now we have small businesses participating.” He also believes that ongoing enhancements to cleaning procedures offer additional opportunities for diverse firms to do business with CATS.

CATS partners with the Business Inclusion Program to identify

Lewis identifies three strategies for companies that are seeking business

opportunities in the transit industry. He says the first is to have the business certified to be listed as available to do work for an agency. Second, he advises companies to begin developing relationships with the staff of the agency by reaching out to potential internal customers and attending events when contacts can be made.

His third piece of advice is to always be open and available to share ideas and communicate with agency staff about their needs in the future.

“We get the best ideas from our staff interacting with local businesses so we can understand their capabilities, and then design our procurements

/ summer 2020

35

into the future knowing that there are companies ready, willing and available to do that work,” Lewis said.

Transit-Oriented Development Fosters Economic Development CATS continues to be a leader in transit-oriented development, resulting from the success of the Lynx Blue Line, a 19-mile light rail line running on a north-south route through the center of the city. The Blue Line helped create more than $3 billion in economic development along the corridor since 2007, with $800 million currently under

development. The City of Charlotte further enhanced development opportunities along the corridor in 2019 by establishing Transit-Oriented Development districts that will re-zone 1,500 parcels along the route that have a recommended future land use of transit-oriented development in a transit station area plan.

Lewis said: “Large corporations are relocating along the transit line – Lowes is building a high-dense office building at one of our stations. Once you invest in infrastructure, it really begins to drive development.” He also envisions even

more TOD planning happening with the Silver Line project to ensure aspects like affordable housing options are included in the planning process. This process will ensure all segments of the community can receive the benefits transit improvement provides. He said, “In addition to the planning for the transit line, we are also doing a transitoriented development study to make sure we maximize opportunities for the community in the process.”

The Lynx Blue Line loads passengers at the Stonewall Station in Center City Charlotte in 2008. The rail line has been an overwhelming success in the Greater Charlotte Region. (Credit: James Willamor)

36

/ summer 2020

CIVIL/HIGHWAY engagement and helping DBEs a cquire all the necessary tools and resources to take advantage of the engagement opportunity.

Construction proceeds during the I-85 Widening, Phase 1 project in Atlanta in 2019.

GDOT’s 10-year Major Mobility Investment Program started with this project and will eventually include 17 infrastructure improvement projects across the state, offering significant opportunities for DBE firms. (Photo credit: GDOT)

GDOT Majority Mobility Investment Program Creating New DBE Opportunities HNTB is charged with ensuring the inclusion of Disadvantaged Business Enterprises (DBEs) throughout the completion of the 17 major infrastructure projects included in the Georgia Department of Transportation Major Mobility Investment Program (MMIP).

The MMIP expects to complete more than $11 billion of improvements to Georgia’s highway infrastructure by 2030 to improve mobility in the region and keep pace with the state’s growing population.

HNTB, currently ranked by Engineering News Record as the 16th largest design firm in the U.S., serves as GDOT’s Program Management Consultant (PMC) for the MMIP. HNTB operates as an extension of GDOT staff by performing

the planning and engineering activities necessary to move the projects to completion. “We are like a junior D.O.T.,” HNTB MMIP DBE Manager Emmanuella Myrthil said. “We perform many of the functions that GDOT’s internal employees might have handled in the past but are now outsourced for greater efficiency.”

One of the activities HNTB performs as PMC is administering GDOT’s DBE Program to ensure diverse firms participate in all aspects of the MMIP. GDOT made clear its expectations for meaningful DBE engagement throughout the life of the project in the contract documents. These expectations include ensuring that DBEs are notified of opportunities early enough for them to properly prepare for

Myrthil’s office maintains ongoing communication with GDOT’s Equal Employment Opportunity Office for guidance and collaboration in administering the DBE Program in support of GDOT’s overall commitment to DBE inclusion. “Our commitment to DBE participation is made obvious and apparent in our outreach assistance, engagement instruction and activity review,” GDOT EEO Administrator Kimberly King said. “We have also made our Supportive Services staff available to assist our PMC in providing notification, assessment, training and engagement to DBE firms.”

HNTB began its DBE Program for the MMIP by creating an internal effort to achieve GDOT’s 20 % DBE goal for the PMC contract. They exceeded the goal by assembling robust teams of 20 DBE partners serving in a variety of roles critical for program completion. DBEs adding to the PMC team are providing services including environmental engineering, communications, construction management, diversity consulting and others.

An important component of HNTB’s success in building the team of DBEs for the MMIP is the use of a co-locating strategy. Thirteen of the 20 DBE partners have staff members embedded into the day-to-day staff of HNTB. Employees of DBE firms represent 44 of the full-time staff working on the project. This integration provides these employees extensive knowledge of the innerworkings of the PMC on a program of this magnitude. This strategy creates a seamless relationship between the HNTB staff and DBE partners that leads to work being completed more efficiently, while also providing employees of the DBE the opportunity to gain intimate knowledge of the program management activities on one / summer 2020

37

of the largest infrastructure programs in the highway construction industry.

goals established by GDOT for each project. The MMIP DBE Office leads this aspect of program and has partnered with Business Transformation Group, a DBE headquartered in Washington, D.C., for this scope of work. BTG has four co-located staff on the project working under Myrthil’s leadership to support monitoring compliance and Equal Employment Opportunity by all companies working on MMIP projects.

“It’s an advantage for us and an advantage for our DBEs,” Myrthil said.

“The DBEs are opened up to the largest highway infrastructure program in the Southeast, and get direct exposure to the managing this kind of program … It sets them up to take on anything after this – and allows HNTB the ability to bring on resources, creativity and skill sets to help us deliver the program.”

The partnership between HNTB and its DBE is performing well thus far with the latest DBE participation report from the month of April 2020 showing that 23% of revenues earned by the PMC were subcontracted to DBE firms.

Jones Worley, an Atlanta-based consulting firm providing communications and marketing services, has three employees serving as part of the MMIP Communications Department.

The employees report directly to the vice president of communications for the MMIP. Although the Jones Worley employees report to HNTB staff on a dayto-day basis, they are also able to share the knowledge gained with Jones Worley President and CEO Cynthia Jones Parks.

The knowledge transfer enhances the capabilities of Jones Worley now and into the future. These employees also create a major source of stability for the firm, as this project is projected to run through the year 2030 and these employees are anticipated to work on a full-time basis for the duration of the project.

38

HNTB’s MMIP DBE Program Manager Emmanuella Myrthil leads day-to-day implementation of DBE compliance and outreach activities as a component of the Program Management Consultant contract signed with GDOT.

The MMIP kicked off its first project, the $135 million Interstate 85 Widening – Phase I, in July 2018 and the highway reopened for traffic in May 2020. Michael Baker International was lead designer for the project and exceeded the DBE goal of 15% by working with firms to take on several roles in the preliminary design. C.W. Matthews was the design/ build contractor and achieved 10% toward the 15% DBE goal assigned for their contract.

“It’s a huge benefit for us,” Parks said.

“Our work with HNTB allows us to benefit from their experience on this program and provides a degree of certainty for my company by having staff on the program for a significant length of time. This gives me the ability to make plans and focus on strategies to grow my firm because of the certainty of these employees working consistently.”

Cynthia Jones Parks, founder, president & CEO of Jones Worley, leads one of the DBE firms partnering with HNTB on the Program Management Consultant contract with GDOT. Jones Worley is providing communications support for the project.

Another component of HNTB’s role as PMC is administering the DBE Program for the 17 projects that will be completed over the next decade. This

includes ensuring that the engineering consultants and the design/build teams comply with the DBE Program and strive to meet or exceed the DBE

/ summer 2020

GDOT’s Equal Employment Opportunity Division worked with the GDOT Office of Innovative Delivery to establish a 15% DBE goal on each of the general engineering consultant contracts.

The two offices also work together to determine the DBE goal for the design/ build contracts by analyzing several factors for each project including the location, types of work involved and DBE availability to establish goals for each design/build contract.

Finding DBE firms to work on the large volume of construction work in the Metro Atlanta region has been a challenge recently. In addition to the MMIP projects, GDOT also has an additional list of design/build projects that are not a part of the MMIP and other highway projects that have DBE goals.

Steven Lively, construction program manager in the Office of Innovative Delivery, believes this is a great time for DBEs to get involved in GDOT work.

“We realize as an agency that we can’t do it on our own so we have to make people aware through our outreach that there are services we need, and we need the help to get these projects done,” he said.

Lively has been with GDOT for more than 26 years and says the aggressive and accelerated nature of the MMIP and other projects managed by his office is attracting more new firms from out of the state and firms from out of the country. His office partners with GDOT’s Equal Employment Opportunity Division and HNTB’s DBE Office to conduct outreach sessions to locate more DBEs to help GDOT reach its participation goals. “We are using DBE firms from birth through delivery of these projects, so there are opportunities for firms providing professional services like engineering, survey, and investigation work; as well as opportunities in traditional field work in construction,” Lively said.

The MMIP recently started construction its second project, the I-16/I-95 Interchange project in Savannah, Georgia. GDOT established a 16%

goal on the $260.5 million project and Myrthil’s DBE Office has worked closely with the design/build team to find DBEs capable of working on the project. Outreach for the project started in the fall of 2019, nine months ahead of major construction ramping up in the summer of 2020. Savannah Mobility Contractors, a joint venture consisting of Dragados USA and Prince Contracting, was selected to complete the project working with Michael Baker International as the lead design firm.

The DBE Program Office is working to prepare more DBE firms to participate in the opportunity as the MMIP prepares for the 15 remaining projects. Several development programs including the Brown Bag Series, DBE Advantage events, DBE Connects events, and a DBE Success Academy are all designed to bring new DBEs into the program and help existing DBEs

improve performance and success.

These sessions have moved to online Zoom meetings during the time of the COVID-19 pandemic and are facilitated

by PMC staff, GDOT employees and subject matter experts from the DBE community, particularly from those DBEs partnered with HNTB on the project.

“My goal is to bring on new DBEs that have never worked with GDOT before into this environment, Myrthil said. “This program is so large and has so much opportunity that we can meet a small business today, who has never been in this space, and we can get them in the right place so that they are ready to compete within five years because these projects are going to be around.”

Colette Holt & Associates provides legal counsel and consulting services to governments and businesses.

Colette Holt & Associates is a firm of nationally recognized experts in conducting disparity studies and designing, implementing and defending successful affirmative action programs.

• Minority / Women / Disadvantaged Business Programs • Affirmative Action and Compliance Consulting and Training • Disparity and Availability Studies • Speaking and Presentation Services • Expert Witness Services • General Counsel to American Contract Compliance Association

(773) 255-6844 • colette.holt@mwbelaw.com • www.mwbelaw.com / summer 2020

39

BUSINESS DEVELOPMENT

LEGAL UPDATE ON RECENT CONTRACTING CIVIL RIGHTS CASES Three recent cases in racial discrimination lawsuits arising in the telecommunications and medical marijuana industries are being closely watched by civil rights practitioners and legal scholars. These opinions yet again raise the evidentiary bar to redressing discrimination in access to building wealth for minority entrepreneurs and in minority communities.

The Comcast case: The Supreme Court Imposes a High Hurdle to Sue for Private Discrimination In Comcast Corporation v. National Association of African American-Owned Media, Byron Allen, the Black owner of Entertainment Studios Network ESN and the National Association of African American-Owned Media (collectively, “ESN”), brought a $20 billion racial discrimination suit against Comcast.

ESN alleged that Allen’s race was a motivating factor in Comcast’s repeated refusal to carry his entertainment channel networks in violation of Section 1981 of the Civil Rights Act of 1866, the nation’s oldest civil rights law.

Sometimes called the “ReconstructionEra Statute,” the Act guarantees that “All persons… shall have the same right… to make and enforce contracts as is enjoyed by White citizens.”

(Section 1983 applies to state and local government actions).

Comcast attributed its refusals to carry ESN content to bandwidth constraints and a preference for programming not owned by ESN. Comcast argued that Allen must prove that race was the

40

/ summer 2020

“but for” cause of its decision and that absent discrimination, he would have secured the contract.

The federal district court dismissed Allen’s suit three times, concluding that ESN’s efforts fell short of showing that, but for racial animus, Comcast would have contracted with ESN. The Ninth Circuit Court of Appeals reversed, finding that a plaintiff must only plead facts plausibly showing that race played “some role” in the defendant’s decision.

Noting that other federal appeals courts disagree with the Ninth Circuit’s interpretation, the High Court agreed to hear the case.

In a March 2020 unanimous decision, the Supreme Court ruled that Allen must show that racial discrimination was the “but for” cause of Comcast’s refusal to carry his entertainment channels.

Even though the Civil Rights Act does not specify in its text that Blacks must show that racism is the “but for” cause of legal injury, the Court agreed with Comcast, holding that the Act’s history

by Colette Holt, J.D., Colette Holt & Associates and Joanne Lubart, J.D., Colette Holt & Associates

and precedent requires “but for” causation. The Court also considered the language of Section 1982 of the Act, which guarantees all citizens the same rights enjoyed by White citizens to inherit, purchase, lease, sell, hold and convey real and personal property.

Since the Court has repeatedly held that a claim arises under Section 1982 when a citizen is not allowed to acquire property “because of color,” it reasoned that a Section 1981 claim must also meet this test. The Court remanded the case to the Ninth Circuit for further review, where Allen will face a much higher bar to prevail.

Section 1982 suits rarely succeed.

Proving that racial animus is essentially the only reason for a decision is difficult, and sophisticated businesses will rarely make bias that explicit. The Comcast decision now makes that test the law of the land everywhere.

The “Weed” Cases: Courts Strike Down Racial Equity Program for Medical Marijuana Licenses In recent years, recognition of the disparate impact of the “war on drugs” on Black and Latino communities has led to attempts to ensure some equity or redress in the awarding of marijuana licenses. Two Ohio cases constitute the first pronouncements on the constitutionality of these measures.

In Pharmacann Ohio, LLC v. the Ohio Department of Commerce, a trial

judge found that Ohio’s use of racial preferences in the award of state medical marijuana cultivation licenses violated the Ohio State Constitution and the Fourteenth Amendment to the U.S. Constitution. The Ohio legislation required the Department of Commerce to award 15 percent of these licenses to Economically Disadvantaged Groups (“EDGs”), defined as Blacks or African Americans, American Indians, Hispanics or Latinos, and Asians.

Plaintiff received a score that would have qualified it for a provisional license but was denied because of the EDG setaside. Defendants asserted that Ohio had a compelling government interest in redressing past and present effects of racial discrimination within its jurisdiction.

Applying the strict scrutiny standard of review, the court determined that there was not a “strong basis in evidence” to support the conclusion that remedial action is necessary to correct discrimination in the medical marijuana industry. The court held that the law failed the first prong of strict scrutiny, which requires that the evidence considered by the legislature be directly related to discrimination in that particular industry, because there was no history of discrimination in the medical marijuana industry. The legislature failed to meet the second prong that requires any program to be narrowly tailored to that evidence because it did not evaluate or employ race-neutral alternative remedies; the statute was inflexible and unlimited; there was no relationship between the 15 percent setaside and the relevant market; and there is a large impact on third parties. An appeal is pending.

In a second case, Pure Ohio Wellness LLC (“Pure Ohio”) appealed the Ohio Board of Pharmacy’s (“Board”) narrow denial of Pure Ohio’s provisional license.

Pure Ohio, a non-minority business, was the leading applicant in a district that would otherwise be awarded a provisional dispensary license, but was denied due to the 15 percent requirement. Pure Ohio alleged that the statute established an unconstitutional race-based quota.

The Board argued that the statute was modeled on the Ohio Minority Business Enterprise program that had been upheld as constitutional.

Evidence submitted included prior discrimination in bidding for Ohio government contracts, statistical and anecdotal studies, other jurisdictions’ marijuana licensing programs, and articles showing minorities are underrepresented in the medical marijuana industry.

Similar to the ruling in Pharmacann, the court applied the strict scrutiny standard and held that there is not a strong basis in evidence that remedial action is necessary to correct discrimination within the medical marijuana industry.

The evidence was not specific to the medical marijuana industry and pertained solely to government procurement contracts. The court concluded that the Board failed to submit any statistical evidence relative to racial discrimination in the relevant industry.

These cases portend more litigation as more states prepare to pass laws legalizing medical or recreational marijuana. Predictably, they showcase how difficult it is to satisfy the demands of strict scrutiny in new industries where there will be no direct quantitative or qualitative data about that narrow market. By refusing to consider how systemic race discrimination impacts all aspects of the lives of racial and ethnic minorities, including their business prospects, the strict scrutiny standard may be used to thwart legislative attempts to stop the replication of racialized government policies into new areas of American commerce.

Going forward, jurisdictions can and should consider following the model of the Illinois statute, which is race- and gender-neutral in its definition of those eligible for the license preference.

The 2019 Cannabis Regulation and Tax Act, 410 ILCS 705, provides for various measures such as grants and loans, fee waivers and other benefits to Social Equity Applicants. Social Equity Applicants are defined as businesses owned by Illinois residents, with at least 51 percent ownership by residents of “impacted areas” or by individuals who have been arrested or convicted for an offense that can be expunged or who is a member of an “impacted family.”

Because there is no mention of race, it is likely that the courts will subject this law to only “rational basis” scrutiny, the lowest level of judicial review. Like

veteran’s or small business enterprise programs, it will likely pass muster under this standard.

Conclusion Once American jurisprudence is no longer at a standstill due to the COVID-19 pandemic, these cases and any new racial discrimination lawsuits will need to be carefully monitored.

While focused on relatively narrow industries, these attacks could result in the weakening of diversity contracting programs. Especially in light of the current judicial climate, policymakers and DBEs would do well to fully educate themselves about the legal standards that must be met to make progress toward ensuring full and fair opportunities for all firms to compete.

Colette Holt, J.D., Colette Holt & Associates

Joanne Lubart, J.D., Colette Holt & Associates / summer 2020

41

BUSINESS DEVELOPMENT

Survival Strategies for DBEs in the Age of the COVID-19 Pandemic: When Health Disparities Become Wealth Disparities

By Franklin M. Lee, Esq.

A

s the old adage goes, when America catches a cold, African Americans catch pneumonia.

Sadly, as a result of the advent of the COVID-19 pandemic, these words have never been truer. The rates of infection and of death from this highly contagious disease for African Americans are nearly double that for Americans as a whole. Compounding the very personal misery that such health disparities have visited upon African American families, their communities, and other people of color for generations, is the devastating tragic collateral damage that state government lockdown orders have caused to the economic well-being of these communities.

Devastating Economic Impacts As of the end of May 2020, the Washington Post reported a staggering 40% decline in the number of working black business owners amid the coronavirus outbreak. As of April, the country had lost nearly 450,000 active African American business owners, far more than any other ethnic group.

However, such disparities also extended into every other minority group, with Latino business ownership dropping by 32% and Asian business owners decreasing by about a quarter.1 Speculation varies regarding the reasons for such economic disparities in the effects of the pandemic upon business ownership in minority communities. Hypotheses range from an over-concentration of minority firms and small disadvantaged businesses in service industries (e.g., retail, hospitality, beauty salons, taxi cabs, and daycare centers), since these are especially vulnerable to social distancing requirements and

42

/ summer 2020

government shut-down orders as “non-essential” businesses, to unequal access to government relief such as Payroll Protection Program (PPP) grants and loans. The latter form of financial aid was mainly distributed through a banking industry that clearly favored more established commercial credit customers, which are disproportionately non-minority.

DBEs and MBEs in Survival Mode Given these devastating economic impacts, as well as the bureaucratic barriers that have impeded access to government relief from COVID-19 shut-downs in the economy, many of the gains of recent decades for Minority Business Enterprises (MBEs) are in serious jeopardy of being lost entirely. Fortunately, most federal DBE construction firms may have been spared from the harshest economic impacts because the construction industry was largely defined as an “essential business” that remained in operation under the terms of most local government shut-down orders.

Yet, there have been devastating indirect impacts on many other minority businesses and Disadvantaged Business Enterprises in a number of retail-oriented industries. Airport Concession Disadvantaged Business Enterprises (ACDBEs) have been particularly hard-hit as a result of severe declines in foot traffic at most airports due to international and domestic air travel restrictions and deep consumer fears of COVID-19 transmission on airplanes. Even in the wake of the lifting of lock-down orders by nearly all states, analysts predict that it may take the airline industry up to a year to fully recover. In the meantime, many ACDBE

firms find themselves in survival mode.

Moreover, many retail and hospitalityoriented, minority-owned businesses find themselves in similar tough circumstances due to COVID-19-related business interruptions at shopping malls, hotels and restaurants that have significantly limited and reduced access to their customers for prolonged periods of time. Given their historically smaller profit margins and diminished access to capital, for the majority of small disadvantaged businesses, the ability to survive until the arrival of better days is far from being a foregone conclusion. Desperate times require desperate measures.

Survival Strategies in the Age of COVID-19 1. CARES Act / Paycheck Protection Program and Local Government Assistance In reaction to the massive disruption of the American economy caused by government shut-downs of entire industries in reaction to the COVID-19 pandemic, Congress enacted the Coronavirus Aid, Relief, Economic Security (CARES) Act to provide in excess of $500 billion in financial assistance in Round 1; and nearly $300 billion in additional financial assistance in Round 2 directed to small businesses.

A key component of the CARES Act included the Paycheck Protection Program (PPP) that provided business loans and grants to firms, provided they preserved the jobs of employees temporarily laid off due to the government shut-downs.

Following widespread complaints in Round 1 on the part of small and disadvantaged businesses that were frustrated in their attempts to submit applications to banks authorized by the U.S. Treasury Department to administer the PPP loans/grants, adjustments were made in Round 2 to administer the funds through Community Development Financial Institutions (“CDFIs”). This action was necessitated because traditional banking institutions were,

by and large, giving priority to their largest existing commercial credit customers’ applications.2 In addition, at least 24 state governments and the District of Columbia have supplemented this federal funding with small business relief funds of their own.3 Moreover, as of June 2020, approximately $30 billion in federal PPP funding remained available. Information regarding the PPP application process can be found on the website for the U. S. Small Business Administration: https://home.treasury. gov/policy-issues/cares/assistance-forsmall-businesses 2. Insurance Claims to Recover Business Interruption Damages Many small disadvantaged businesses hold some form of commercial property and casualty insurance policy to protect against various kinds of losses that their businesses might experience under certain circumstances. Typically, commercial policy holders file claims under such policies to seek recovery for financial losses from such events as fire, vandalism, and plumbing failures that cause damage to business property and that adversely affect business operations. Many such policies also permit the policy holder to recover some amount of money for losses in income that the firm has sustained as a result of the interruption of business caused by the underlying event.

However, exclusions contained within the terms of such policies typically limit the circumstances under which the policy may cover claims for income loss resulting from business interruptions caused by certain casualty events.

Several insurance carriers have inserted exclusion clauses in their property and casualty insurance policies that expressly exclude recovery for coronavirus-caused business income losses. Other such policies have no such expressly stated exclusions.

Under the latter type of insurance policies, small and disadvantaged business policy holders may have a fighting chance of recovery for such coronavirus-caused loss of business income despite industry statements to the contrary.

In general, there are two provisions in commercial property and casualty insurance policies that may provide socalled “Business Interruption” coverage.

The first covers loss of business income caused by “direct physical loss of or damage to” the insured’s property.

The second provision, entitled “Civil Authority,” covers loss of business income caused by “action of civil authority that prohibits access to” the insured’s property. To the extent COVID-19 government lock-down orders to mitigate the spread of the virus resulted in loss of business income, there is a real possibility that coverage exists under one or both of those provisions.

Careful legal review of commercial property and casualty insurance policy terms is necessary to make a determination regarding the likelihood of recovery for loss of business income under such circumstances. One such prominent national civil rights law firm, Mehri & Skalet PLLC, is offering to undertake such insurance policy reviews pro bono as a service to DBE firms and other small businesses. This law firm’s effort is being supervised by Jay Angoff, Esq. Prior to joining the law firm, Angoff served as Deputy Insurance Commissioner for the State of New Jersey, and more recently as Insurance Commissioner for the State of Missouri.

He also served as the first Director of the Affordable Care Act Implementation under the Obama administration.4 As the devastating impacts of COVID-19 continue to ravage the financial prospects of thousands of DBE and ACDBE firms (e.g., airport restaurants, bars and retail establishments), even as government lock-down orders are lifted, no stone should be left unturned in seeking financial relief. Small and disadvantaged businesses remain at the very highest risk of mortality in the Age of COVID-19. Under such dire circumstances, pressing ahead with an array of comprehensive “intensive care” strategies for survival is not only prudent, but an absolute imperative.

Franklin Lee, a partner in the Baltimorebased law firm of Tydings & Rosenberg LLP, represents DBE firms in certification applications and appeals. In addition, he counsels state and local governments in the establishment of economically

inclusive contracting policies, and urban economic development strategies. As former Chief Counsel to the Minority Business Enterprise Legal Defense & Education Fund (“MBELDEF”), he spearheaded novel class action litigation to advance the interests minority-owned firms against unfair and discriminatory treatment in the marketplace, and also advised USDOT regarding post-Adarand reforms to the DBE Program. Mr. Lee can be reached at flee@tydingslaw.com.

Franklin Lee, a partner in the Baltimore-based law firm of Tydings & Rosenberg LLP, represents DBE firms in certification applications and appeals. In addition, he counsels state and local governments in the establishment of economically inclusive contracting policies, and urban economic development strategies. As former Chief Counsel to the Minority Business Enterprise Legal Defense & Education Fund (“MBELDEF”), he spearheaded novel class action litigation to advance the interests minority-owned firms against unfair and discriminatory treatment in the marketplace, and also advised USDOT regarding post-Adarand reforms to the DBE Program. Mr. Lee can be reached at flee@tydingslaw.com.

1 The Washington Post, May 25, 2020 (www.washingtonpost. com/business/2020/05/25/balck-minority-business-ownerscoronovirus/) 2 Nearly all smaller disadvantaged businesses lacking such prior banking relationships were left out in the cold when the supply of PPP loan / grant money completely dried up within the first few days following release by the Treasury Department. Accordingly, for Round Two of the CARES Act, adjustments were made by the Treasury Department and the Small Business Administration for administration of the PPP funds through approximately three hundred Community Development Financial Institutions. https:// home.treasury.gov/system/files/136/SBA-Paycheck-ProtectionProgram-Loan-Report-Round2.pdf 3 The US Chamber of Commerce has issued a useful guide on state and local government financial resources that also provide relief for COVID-19-related disruptions to the operations of small businesses. https://www.uschamber.com/co/run/businessfinancing/state-government-coronavirus-assistance-guide 4 DBE and ACDBE firms that wish to have their insurance policies reviewed for viability of claims that seek recovery for “interruption of business” losses, and to explore potential options for pursuing recovery, should contact Jay Angoff, Esq. at Mehri & Skalet PLLC, and submit their full property and casualty insurance policies to his attention at Jay.angoff@findjustice.com and to dcharles@ findjustice.com.

/ summer 2020

43

BUSINESS DEVELOPMENT

T

he first five months of 2020 showed an uptick in U.S. construction spending overall, according to recently published construction forecast reports by Deloitte, FMI, and the U.S. Census Bureau to name a few. But this was at a time when COVID-19 was not spiking as it is now and before the onset of the

those trucks disinfected properly? Are all passengers wearing masks in the vehicle? Is it necessary for each worker to drive separately? -- keeping in mind that lack of reliable transportation to job sites is a key reason why construction companies cannot secure enough workers. Additionally, for added safety, temperatures need to be taken at

The Impact of COVID-19

on Construction

By Karen Barbour, founder and president of the Barbour Group, LLC.

June 2020 social unrest and protests.

In cities such as New York, construction stop orders were put into effect for several months with some just reopening as recently as May. Across the United States, many construction sites closed (for two weeks or more of quarantine) once any worker tested positive for COVID-19. The delays are costing construction companies and owners more than just lost profits.

June’s impact to the construction industry may have an unanticipated dampening effect to construction that may take several months to manifest.

Only time will tell.

Tracy Steedman1, an attorney in Maryland with Adelburg Rudrow, in a recent webinar hosted by the Alliance for Hispanic Commercial Contractors2 strongly emphasized to the participants how COVID-19 has created multiple layers of new safety measures for job sites. While it may be possible for workers to socially distance from each other on a job site, it is not uncommon to see four or more workers arrive in one work truck. Questions to consider: Are

44

/ summer 2020

least every day and tracking of any infected worker must be diligent to stop any spread of the virus to the entire construction team. If a worker has a temperature and needs to leave the site, how will that worker find transportation home? These are just some new job safety issues born by COVID-19. Further, the stimulus checks are creating higher pay for construction workers than what they would receive if they went to work, creating havoc on an already diminishing labor pool.

To offset the cost of retained labor and overhead expenses during COVID-19, Paycheck Protection Program (PPP) funds were quickly sought after and secured by many contractors throughout the US. Construction was the biggest business sector that received PPP funds – 13% of the $342.3 billion in total3. According to 20 contractors polled for this article, several received PPP funds in the $1.3 million to $1.5 million range (having revenues up to $80 million), while others received funds in the $150,000 to $800,000 range (having revenues

up to $20 million). The fund amounts varied depending on how much work the contractors self-performed and the levels of skill and pay of their employees. Some surety companies are treating the entire amount of the PPP funds as a current debt, despite the long-term payout and loan forgiveness option. Others, like the SBA Office of Bond Guarantees, are treating 25% as a current liability and deferring the remainder as long-term debt. Only a vfew sureties are treating the debt as pure capital.

With irresistible interest rates, project owners are spending more. The “Value of Construction Put in Place – Seasonally Adjusted Annual Rate” by the U.S. Census4 shows that residential construction is up - $543 billion in May of 2020 versus $538 billion in May of 2019; and that non-residential construction is down - $812.5 billion in May of 2020 versus $814 billion in May of 2019. Of the $812 billion reported in May of 2020, $106.9 billion is being spent on Highway and Street, $117.8 billion being spent on Power, and $104 billion being spent on Educational construction. Recently a heating and air construction client expressed concern that there is very little new construction starting now. If those concerns materialize, then there will not be any significant work for the major subtrades the first quarter of 2021, causing a shift for more contractors to bid aggressively on renovation work to capture much needed revenue.

Federal construction, according to Deloitte’s “2020 Engineering and Construction Industry – A Mid-Year Update,” is poised to spend $2 trillion over the next 10 years on infrastructure upgrades.5 However, for small business contractors, the contract awards are taking too long. The school of thought is that the funds will take a long time to be allocated. For example, a United States Postal Service office took bids at the end of April 2020 on

a parking restoration project with an estimated value of $2.5 billion. When the contracting officer was contacted directly via email for an update, the response received on June 15 was, “I apologize the length of time it has taken to finalize the award of this project.

Unfortunately, I cannot provide you with any information until an award has been made.” What the federal government fails to realize is that once a project is bid, especially one that requires a surety bond, the surety company will include the full estimated value of that bid into the contractor’s backlog until the results are known. Luckily, the surety company involved here elected to include only 50% of the estimated value into backlog to allow the contractor to pursue more work. This is just one example. Whether the delays are due to COVID-19 because of contracting officers and their administrative staff taking unemployment, due to challenges working virtually, or truly a lack of funding are anyone’s guess.

FMI’s report, “North American Engineering and Construction Outlook – First Quarter 2020 Report,” suggests that the second and third quarter of 2020 will bode negative GDP growth with a hint of an economic recession.6 With the onset of COVID-19 spikes, stalled stimulus funding, protests, and

possible extended disruptions for construction, FMI research predicts that the country could see as many as six quarters of negative GDP growth, leading to “irreparable financial damage and implications across multiple industries and seemingly healthy organizations and corporations.”7 For now, one of the three surety companies contacted, “Surety A,” stated that their Northeast region had their largest single month record in May compared to sales over the past 18 months. They reported that no bonded contractor clients went out of business due to any COVID-19 shutdowns. “Surety B” stated that COVID-19 has severely delayed the receipt of CPA year-end financial statements. They stated that the PPP regulations are a challenge to monitor for their underwriting compliance and analysis. Unlike “Surety A,” “Surety B” reports that construction projects have stopped in the City of Boston with bids and project awards delayed.

“Surety B” is concerned about their client’s results for 2020 and 2021 due to lack of a profitable backlog capture.

Last, “Surety C” stated that they have seen large PPE contracts with no force majeure provisions and the requirement by general contractors to have their subcontractors provide a surety bond to guaranty their subcontract agreement, regardless of its value.

Karen Barbour is the founder and president of The Barbour Group, LLC. She is a veteran of the surety bonding industry. Karen was instrumental in the creation of the State of Maryland’s Change Order Fairness Act and is working to fully-implement the legislation across the state. Karen started her career in surety as a home office bond underwriter in 1985. Karen is well known as an innovator and expert within the surety industry. Karen Barbour, karen@ thebarbourgroup.com

A few regional banks on the east coast are showing concern like the sureties noted above. Bank lines of credit provided to construction firms are being reviewed carefully and are generally not being renewed for the standard 12 months. Some banks are extending renewals only for six months, while one small regional bank is extending the bank line of credit for only three months due to COVID-19’s economic impacts.

The fourth round of PPP funds approved in Summer 2020 gives small business owners with less than 100 employees the ability to apply again if they were not initially successful -- but they must reapply no later than Aug. 8. There is a pool of $130 billion remaining of the total amount Congress appropriated to the program and it is being considered for a fifth round of PPP. Treasury Secretary Steven Mnuchin is hoping that the fifth round will be approved with legislation passed by the end of July.

1 https://adelberg.com/attorney/tracy-steedman/ 2 www.ahcc-midatlantic.org 3 https://www.insurancejournal.com/news/ national/2020/04/17/565287.htm 4 https://www.census.gov/construction/c30/pdf/totsa.pdf 5 https://www2.deloitte.com/us/en/pages/energy-and-resources/ articles/engineering-and-construction-industry-trends.html 6 https://www.fminet.com/wp-content/uploads/2020/03/ Q1_Outlook_2020.pdf 7 https://www.fminet.com/wp-content/uploads/2020/03/ Q1_Outlook_2020.pdf.

Surprise someone with the perfect gift —a subscription!

Visit www.AmericanDBE.com

today.

/ summer 2020

45

BUSINESS DEVELOPMENT

Structural Issues Remain Within U.S. Capital/Credit Markets...

BuT Don’t Miss PPP and EIDL Opportunities

By Allen Brown The undeniable reality and worldwide impact of COVID-19 landed individuals and organizations in a new world.

Looking back, it’s clear how past crises like The Spanish Flu, the Stock Market Crash & The Great Depression, World Wars I & II, the Civil Rights Movement, and most recently The Great Recession, significantly changed societal norms in ways that altered attitudes and behaviors. The case can be made that unprecedented times call for unprecedented actions. Such was the case as the 116th Congress voted into law “The Coronavirus Aid, Relief, and Economic Security (CARES) Act”1 to stay the sudden near halt of the U.S. economy as consumer spending grinded to a trickle in the wake of social distancing instituted to stop the spread of the coronavirus/COVID-19 pandemic.

On March 13, 2020, President Donald Trump declared a national emergency, effectively cracking the door to capital access for Minority Business Enterprises (MBEs) in an attempt to provide emergency financing to small businesses across the country. Several programs were put in place under the CARES Act to provide relief to small businesses. Two of the most notable programs, the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP), were created to provide funding assistance to address any ongoing cash-flow (working capital) and payroll shortages due to losses in revenue caused by the pandemic.

Unfortunately, the roll-out of both programs hit a number of hurdles as the U.S. Department of Treasury and the Small Business Administration (SBA) were unable to shift resources at a pace that matched the number of applications received. Reports also surfaced of applications made by well-

46

/ summer 2020

connected, well-resourced businesses with traditional commercial banking relationships that were moved to the front of the line to get their requests processed.

For African Americans, this seemed familiar, as a disproportionately high number of minority businesses were excluded from the initial round of funding; calling into question real or perceived intentions of the Trump Administration to widen the disparities between non-minority and minority businesses. This left some black business owners wondering if they even needed to apply, and reinforced concerns of a real or perceived intention to deny capital to minority-owned firms.

However, the future of America is tied to the future of the minority community, and particularly the African American community. As the “browning of America” occurs, minority businesses and communities remain largely untapped with the highest amount of unemployment, the fastest growing segment of business ownership, and impressive gains in buying power. It’s imperative that America harnesses the capital created in minority communities.

Intentionally keeping capital out of the hands of MBEs in times of a crisis could result is a continued prolonged recession and eventual economic collapse.

A major challenge facing minorityowned businesses is related to the ongoing narrative emphasizing their diminished capacity when compared to their non-minority contemporaries.

A recent study shared that 40% of black business owners shut their doors during the initial weeks of the pandemic in comparison to 17% of white business owners. At first glance, there appears to be an overwhelming disparity of black business owners struggling to keep

their doors opened. Yes, black business owners are dealing with this issue in a higher number. However, could it be that this is more pronounced in the black community because minorityowned businesses tend to be smaller in size and scale? In cases where private equity is absent, all small businesses, non-minority and minority, are typically chronically undercapitalized and lack the margins to float operations for any extended amount of time.

Let’s put this theory to the test. How many of the questions can you answer ‘Yes’ to?

• Do you know whether you will have enough cash to make payroll next month? How about the month after that?

• If you are running a start-up, do you know your burn rate; that is, how fast you are going through your cash?

• Do you know how profitable your company’s products or services really are? Do you know that you can be running a profitable business and still run out of cash?

• If you are thinking about buying a new piece of equipment – a truck, a computer system, a machine – do you know how to figure the likely return on your investment?

The questions listed above are from “Financial Intelligence for Entrepreneurs: What you really need to know about the numbers.” In the book, the authors say “many entrepreneurs can’t answer yes to questions like these.” The reason [is not that they are a minority, it] is that they haven’t yet acquired the necessary financial intelligence.

Why is this important? It is because an “entrepreneurial leader” understands that one of their primary responsibilities in a volatile, uncharted, complex, ambiguous and hyper-connected environment is to predict the company’s next move. Doing this requires data – data that helps them navigate their near- and long-term futures. During a crisis or recession, the need for financial intelligence and the data provided by the bookkeeping/accounting function are critical to the business’ success.

Having the capacity to survive or thrive is directly correlated to the business owner’s ability to develop a forwardlooking plan and execute against it.

When considering the need for financial intelligence and quality accounting data, combined with an ongoing need for working capital, how minority business owners approach the PPP and EIDL funding mechanisms can considerably change the outcome.

Taking the time to prepare the paper application (in advance of completing the online application) helps a business owner gain the financial intelligence needed to effectively communicate the impact COVID-19 is having and will have on business operations in the foreseeable future.

Despite recent positive trends in minority business growth rates, the lack of access to working capital in the traditional capital and credit markets continues to stifle cashflow

consistency, profitability and scalability.

The relaxed loan qualification requirements instituted in support of small businesses through the CARES Act for the Paycheck Protection Program2 (PPP) and Economic Injury Disaster Loan (EIDL), have presented an unprecedented opportunity for Minority Business Enterprises to not only sit at the capital/credit markets table, but also to select from viable options and join the conversation (i.e. How much money the business needs based on its financial capacity). For more information, contact the Small Business Administration or U.S. Department of Commerce Resource partners to learn more about the Economic Injury Disaster Loan.2 Now is the time for all business owners to keep calm and keep pressing forward. There is a light at the end of the tunnel – and new opportunities on the horizon for those who survive the current crisis.

1 The CARES Act provides fast and direct economic assistance for American workers, families, and small businesses, and preserve jobs for our American industries. https://home.treasury.gov/policy-issues/cares#:~:text=The%20CARES%20Act%20provides%20 fast,preserves%20jobs%20for%20American%20industries.&text=The%20CARES%20Act%20provides%20fast%20and%20direct%20economic%20assistance%20for,jobs%20for%20our%20American%20industries.

2 Funding for the Paycheck Protection Program expired on June 31,2020. As of June 18th, Funding for the Economic Injury Disaster Loan Program is set to expire on September 30, 2020. To apply go to https://covid19relief.sba.gov/#/ and paper versions of the disaster loan supplemental application forms can be found at https://disasterloan.sba.gov/ela/Information/PaperForms

Allen Brown is a South Carolina-based CEPA (Certified Exit Planning Advisor) advisor helping entrepreneurs and executives of privately held businesses elevate their activities in order to get control of their companies while achieving their personal, business and financial goals. For more information and to download the Transferrable Value eBook, go to: www.wealthexchange.com

TBE Healthcare Personal Protective Equipment  3M N95 & KN95 Protective Mask  3-Ply Surgical Masks  4/6 Mil Industrial Grade Blue Nitrile Gloves  Infection Control Face Shield  Surgical Gowns  COVID-19 On site Testing, Virus Collection & Transportation Kits , Supplies  COVID–19 Thermo Cameras (detect temperatures of 50 pp at a time)  COVID–19 Thermometers

Call today for a quote 24/7

1-877-488-6329

tbehealthcareppe.com MBE-NMSDC * MBE/EDGE *DBE * SBE * WBE * LEDE * SDB A division of Tra’Bian Enterprises / summer 2020

47

B2GN

W

The Nation’s Leading Diversity Management Software

Your trusted source for contract compliance, certification, outreach, goal setting, EEO, bid compliance, OJT, spend analysis, and vendor management systems.

Visit us today at

B2Gnow.com 48

/ summer 2020