Frederick should add at least one employee to work on procurement issues to help improve problems in the city with hiring minority- and woman-owned businesses for contracts with the city, according to one of the recommendations from a new report discussed by the mayor and aldermen Wednesday.
The city’s 2021 disparity report, designed to identify shortcomings in the city’s procurement process, shows that being owned by a woman or racial or ethnic minority “continues to have an adverse impact on a firm’s ability to secure contracting opportunities with the City of Frederick, further supporting more aggressive remedial efforts.”
The study looked at the city’s contracts for the categories of construction, construction-related professional services, professional services, other services and goods for the fiscal years 2014 through 2018.
The report, conducted by the Atlanta-based consulting company Griffin & Strong, found that only 25 percent of the $91 million the city awarded on solicitations of more than $50,000 during that time went to firms owned by women or minorities. And 96 percent of those awards went to one minority-owned firm.
And about two-thirds of disadvantaged business enterprises — businesses that are majority-owned by people who are socially and economically disadvantaged — that were contacted as part of the study said they weren’t aware that they should or could register to do business with the city, and 21 percent said they didn’t know how to register with the city.
A study of the private sector in the Frederick market found that being a business owned by a woman or minority “is associated with lower firm revenue and lower self-employment likelihoods.”
The data “found support in the anecdotal evidence of the experiences of firms in the City of Frederick’s marketplace,” the study said.
The report’s findings are sad, but confirm what some people have been saying about opportunity in the city for years, said Alderman Derek Shackelford.
He asked what opportunities the city has in the short term to make changes.
Putting adequate staffing in place and making sure those people have the authority to implement policies is very important, said Rodney Strong, Griffin & Strong’s founder and CEO.
Having people trying to implement policies on a part-time or ad hoc basis won’t be as effective, he said.
Among the report’s many recommendations was one that certain contracts, especially construction jobs, be set aside so that they can only be bid on by small businesses.
It’s a good way to get smaller firms that have only worked as subcontractors to be able to bid on jobs as prime contractors and grow their capacity, the report said. But it’s important to also provide support services to those companies as they make the transition to handling jobs as a primary contractor.
Alderman Roger Wilson asked whether the city should look into setting up a mentor-protege program through which larger companies can work with smaller companies on projects.
Strong said he helped set up such a program in Georgia, which identified prime contractors and subcontractors and set them up with smaller firms that they were required to take on for private sector and government jobs.
Alderman Ben MacShane said it’s important to recognize how entrenched and longstanding the procurement problem is in the city. He said the board should not be lulled into a sense that a little more outreach can get them where they need to be.
There are plenty of woman- and minority-owned businesses working in Baltimore, Washington, Montgomery and Prince George’s counties and northern Virginia, he said.
Getting them to come to Frederick will require a deliberate change in the city’s corporate culture, he said.
Mayor Michael O’Connor acknowledged the report “doesn’t tell the most flattering picture of the history of the city of Frederick.”
The mayor said the upcoming fiscal 2022 budget will reflect a commitment to staffing needed to address some of the issues in the report.
Shackelford said implementing the suggested changes will bring some pushback, as some people and companies will have to give up some of the advantages they’ve traditionally had. But that shouldn’t stop the city from doing what it needs to, he said.
“This make[s] our community better,” Shackelford said. “This just makes darn good economic and business sense for the city of Frederick to do.”