West Palm Beach has postponed a final decision on big changes to its small and minority-owned business program that would include expanding the number of firms eligible to participate and requiring prime contractors to partner with smaller firms rather than having that as a goal.
The program changes were up for final approval during Monday’s City Council meeting, but Mayor Keith James said he wanted the agenda item continued until February.
“That will give staff an opportunity to sit down with industry representatives and hear any questions, concerns that they may have,” the mayor said.
West Palm Beach is considering the changes at a time when diversity, equity and inclusion programs in government, academia and businesses have come under attack by political conservatives who decry them as reverse discrimination. Some trade groups have long viewed small and minority business assistance programs in the same light, despite studies that have shown small and minority businesses getting a disproportionately small amount of government contracting work.
In 2018, Associated General Contractors, a trade group, challenged the work of a firm that was conducting a disparity study for Palm Beach County’s Solid Waste Authority. The county was contemplating re-establishing its small and minority-owned business assistance program, and — because judicial rulings have barred such programs unless they are set up to address disparities that have been identified in a particular market — the disparity study was a necessary first step.
The county and its Solid Waste Authority ultimately did re-establish small and minority-owned business assistance programs.
AGC will have a chance to weigh in on the proposed changes in West Palm Beach.
“I understand that there have been meetings already scheduled with the AGC for some time in January,” James said.
This year, West Palm Beach decided to spend up to $300,000 on a study to show if small and minority-owned firms were still getting a disproportionately small amount of government contract work. That study has not yet been undertaken, but after the county made changes to its assistance program for small and minority-owned firms, West Palm Beach is considering alterations to its own program.
With City Commission members Cathleen Ward and Christina Lambert absent, the commission gave preliminary approval to changes on Nov. 25.
Those changes include renaming the city’s Office of Economic Opportunity to the Office of Small and Minority Business Programs. The amount of gross revenue a firm could make and be considered a small business would be increased.
What is considered a ‘small business’ in West Palm Beach?
In construction, a firm that does not exceed $13 million in annual gross revenue would be considered a small business. The previous gross revenue limit for construction firms was $9 million.
The gross revenue threshold would be raised to $7 million from $5 million for goods and services firms and for professional services firms.
“We have been approached by small businesses to look at increasing these numbers,” said Frank Hayden, director of the city’s Office of Economic Opportunity. “What this will do when we increase it is it will expand the number of businesses who can participate in our program.”
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Another change that could have an even bigger impact on the program is moving small business participation in contract work from a goal to a requirement. Many cities and counties have resisted such a policy in the face of complaints — and possible legal challenges — about quotas.
In 2020, the city set a goal of having 15% of government contract work go to small businesses. The city wants to change that to a requirement of 18%.
That would mean a large firm bidding to land a big contract would need to spell out how it will partner with a smaller firm to have it handle at least 18% of the work. The main or “prime” contractor could no longer merely spell out a goal of having one or more small businesses handle 15% of the work.
The program director would have the authority to modify the small business participation requirement, but Hayden said prime contractors have been hitting and exceeding the 15% goal. If the changes get final approval in February, they will have to continue to do so.
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A bid must first be deemed responsive to what the city expects before it could be accepted
“If we say that it is an 18% participation, we expect the primes to meet that objective,” Hayden said. “If they do not meet it, we have determined that they will be deemed non-responsive.”
Commissioner Shalonda Warren, who has been a supporter of the city’s business assistance programs, said she’s particularly pleased with some of the changes under consideration.
“I do believe that it is important that we increase the threshold because, if the cost of goods is going up, the cost of labor has gone up, then it’s only natural that their total revenue will go up although the bottom line doesn’t really change a whole lot,” she said.
Wayne Washington is a journalist covering West Palm Beach, Riviera Beach and race relations for The Palm Beach Post. You can reach him at [email protected]. Help support our work; subscribe today.
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