Business Market Availability and Disparity StudySHELBY COUNTY SCHOOLS

Report PresentationNovember 28, 2017

Agenda

Introductions What is a Disparity Study? Background Study Framework Quantitative Results Qualitative Results Recommendations Questions and Answers

Key Disparity Study TeamD

R. F

RED

SEA

MO

N MGT Executive Vice President/

Technical Advisor• Provided

technical and methodological advice and expertise to the MGT teams throughout the engagement.

MR

. REG

GIE

SM

ITH MGT Executive-in-

Charge• Responsible for

ensuring the MGT teams have the resources to fulfill all contractual requirements, including delivering a final report that is accurate, valid, and legally defensible.

MS.

VER

NET

TA M

ITC

HEL

L MGT Project Director

• Provided the day-to-day management of the study, the MGT teams, and has regular interface with the District Project Manager.

MS.

JAN

ICE

BAN

KS Subconsultant,

Small Planet Works

• Conducted interviews with business owners and stakeholders, managed the public hearings and conducted the custom census surveys.

Disparity Study

Disparity Studies are the primary means by which government entities determine whether there is legal justification for the establishment, continuation, or modification of programs designed to promote the full and fair participation of disadvantaged, minority-, and women-owned businesses in government contracting

Background

Shelby County School District (District) contractedwith MGT to conduct its first Disparity Study.

The study objectives included:

Determine whether the District, either in the past or currently,

engages in discriminatory practices in the solicitation and award of

contracts in Construction, Architecture and Engineering,

Professional Services, Nonprofessional Services, and Goods

& Commodities to M/WBEs.

Determine if a legally justified need exists for the establishment

of an M/WBE program in accordance with the guidelines set

forth by the Supreme Court and relevant subsequent cases.

Legal Framework

• Must show a compelling interest with factual predicate evidence.

• Remedy must be narrowly-tailored.Strict Scrutiny

• Recommendations linked to findings.• Goals linked to availability.• Limit burden on 3rd parties.

Narrow-Tailoring

• Private sector disparities linked to public sector can provide a compelling interest.

Passive Participant

Report Sections

Chapter 1. IntroductionsChapter 2. Legal FrameworkChapter 3. Review of Policies, Procedures, and ProgramsChapter 4. Market Area and Utilization AnalysesChapter 5. Availability and Disparity AnalysesChapter 6. Private Sector and Non-Goal AnalysesChapter 7. Anecdotal AnalysisChapter 8. Findings and Recommendations

Study Outline

Expenditures analyzed for years between July 1, 2011 and June 30, 2016. Business Categories included in the study:

– Architecture & Engineering– Construction– Professional Services– Nonprofessional Services– Goods & Commodities

Study includes prime analyses only.

Relevant Market Area

The Relevant Geographic Market Area identified for the District is Shelby County.

M/WBE Prime Utilization

Architecture & Engineering: Minority Firms earned 0.08% and Nonminority Women earned 7.52% of the total dollars

Construction: Minority Firms earned 0.55% and Nonminority Women earned 1.21% of the total dollars

Professional Services: Minority Firms earned 30.70% and Nonminority Women earned 0.78% of the total dollars

Nonprofessional Services: Minority Firms earned 12.41% and Nonminority Women earned 0.18% of the total dollars

Goods & Supplies: Minority Firms earned 12.97% and Nonminority Females earned 2.46% of the total dollars

Private Sector Analysis

In a statistical analysis of survey data in the District area that controlled for the effects of certain variables (such as, company capacity, owner level of education, and experience), all M/WBE-owned firms earned less revenue in 2016 than did their non-M/WBE counterparts supporting the conclusion that M/WBE status is negatively related to earnings when compared with earnings for non-M/WBEs

Econometric analysis using data from the 2011-2015 American Community Survey (ACS) data for the Memphis Public Use Microdata Area found statistically significant disparities for entry into self-employment for African Americans and Nonminority Women.

Anecdotal

QUALITATIVE DATA

COLLECTION ACTIVITIES

Telephone Survey

3 Public Hearings

51 In-Depth

Interviews

5 Stakeholder Interviews

BarriersWith respect to disparate

treatment, M/WBE anecdotal respondents reported

Anecdotal

Experienced discrimination in the private sector 13.6%

That an informal network precluded their firms from obtaining work in the private sector 15.8%

Competing with large companies 47%

Limited time to prepare bid package or quote 26%

Selection process criteria26%

Disparity

Business Ownership Classification

Architecture & Engineering Construction

African American Underutilization* Underutilization*

Asian American Underutilization* Underutilization*

Hispanic American Underutilization* Underutilization*

Native American Underutilization* Underutilization*

Nonminority Women Overutilization Underutilization*

*Indicate a substantial level of disparity, which is a disparity index below 80.00.Not Applicable denotes the analyses cannot be applied in this case due to the mathematical constraint of division by zero.

Disparity

Business Ownership Classification

Professional Services

Nonprofessional Services

Goods & Commodities

African American Underutilization* Underutilization* Underutilization*

Asian American Overutilization Overutilization Overutilization

Hispanic American Underutilization* Underutilization* Underutilization*

Native American Underutilization* Underutilization* Underutilization*

Nonminority Women Underutilization* Underutilization* Underutilization*

*Indicate a substantial level of disparity, which is a disparity index below 80.00.

Commendation & Recommendations

C O M M E N DAT I O N

The District should be commended for their pursuance of a disparity study to determine if there is evidence to support a M/WBE program

R E C O M M E N DAT I O N S

Establish subcontractor project goals

Collect subcontractor data for all contracting areas

Establish a SLBE Program Narrowly tailor future

MWBE programs

Aspirational Goals

M/WBE GOAL

Architecture & Engineering 13.68%

Construction 24.17%

Professional Services 35.24%

Nonprofessional Services 32.57%

Goods & Commodities 24.02%

Conclusion

The study provide factual predicate evidence to support the MWBE Program.

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