DEPARTMENT: Economic Development
DEPARTMENT HEAD: Rene Dominguez
COUNCIL DISTRICT(S) IMPACTED: City-wide
SUBJECT: Proposed Amendments to the SBEDA Ordinance
SUMMARY:
A consideration of the proposed amendments to the SBEDA Ordinance, which addresses disparities in contracting with Small, Minority and Women-Owned Business Enterprises (S/M/WBEs) as evidenced by the City’s 2015 Disparity Study and related public comment.
BACKGROUND:
The SBEDA Ordinance combines best practices from around the country to create a robust and comprehensive program designed to remedy disparity of S/M/WBEs utilized on City contracts. The SBEDA Ordinance was revised in 2010 to create the Central Vendor Registry (CVR), Goal Setting Committees, capacity building tools such as the Mentor Protégé Program, and compliance module. The 2010 SBEDA Ordinance established a narrowly-tailored program, as required by law.
Per the legal standard set by the U.S. Supreme Court case Richmond v. J.A. Croson Co. (1989), a disparity study should be conducted every five years to determine if disparities of S/M/WBEs remain. Therefore, on April 17, 2014, City Council authorized a contract with National Economic Research Associates (NERA) to conduct a new disparity study which was adopted on December 3, 2015. The study indicated the City exhibited progress in utilizing S/M/WBEs on City contracts reporting a near 50% improvement from the 2010 Disparity Study.
However, the study showed that disparity of S/M/WBEs in the San Antonio market area remains. Ultimately, the Disparity Study recommended that the implementation of the SBEDA Ordinance continue with potential amendments explored to strengthen the program.
Since January 2016, City staff has conducted significant outreach with over 20 community stakeholders to review potential amendments. City staff, Franklin Lee (outside legal counsel), the Small Business Advocacy Committee (SBAC), and community stakeholders assisted in the development of amendments to the SBEDA Ordinance. On March 3, 2016, the Small Business Advocacy Committee (SBAC) hosted a public hearing to present the potential amendments to the public and receive feedback. In addition, the potential amendments were posted on the City’s website on March 4, 2016 and sent via electronic newsletter to all vendors registered in the CVR to allow for public comment and input.
On April 27, 2016, the proposed amendments to the SBEDA Ordinance were presented to City Council during B Session.
ISSUE:
To address the results found in the 2015 Disparity Study and after careful consideration of all comments received, City staff proposes the continuation of the SBEDA Ordinance with the addition and/or expansion of the following proposed amendments:
Tools to assist S/M/WBE Prime Contractors (utilized on “best value” solicitation types):
• The Prime Contractor Program, which allows up to 20 evaluation points to be awarded to S/M/WBE prime respondents, is being expanded to the Construction, Other Services, and Goods and Supplies Industries;
• The Emerging Prime Contractor Program, which allows up to 20 evaluation points to be awarded to Emerging S/M/WBE prime respondents (those firms that are ¼ the size of an SBE per the SBA size standard), is being expanded to Architecture and Engineering, Professional Services, Other Services, and Goods and Supplies Industries;
• The Joint Venture Program, which provides up to 20 evaluation points to a joint venture respondent per their S/M/WBE percent makeup on a contract, is being expanded in the Construction and Architecture and Engineering Industries; and
• The Mentor Protégé Program, which allows S/M/WBEs attend the Small Business Boot Camp with Alamo Colleges, pairs S/M/WBE firms with a mentor to learn best industry practices, and allows up to 5 evaluation points to be awarded to qualified mentors, is being expanded to the Architecture and Engineering Industry.
Tools to incentivize large firms to build the capacity of an S/M/WBE (utilized on “best value” and low bid solicitation types):
• Joint Venture Incentives, which provides contract incentives, such as additional contract option years, to prime respondents if they joint venture with an S/M/WBE who is performing no less than 40% of the contract, is being expanded from SBEs only to S/M/WBEs in the Other Services Industry; and
• The Distributorship Development Program, which provides contract incentives, such as additional contract option years, to prime respondents who are manufacturers if they establish a local S/M/WBE distributor, is being added as a new tool in the Goods & Supplies Industry.
Administrative changes to build the capacity of an S/M/WBE as a Prime Contractor (utilized on “best value” and low bid solicitation types):
• S/M/WBEs awarded a City contract under $10 million at the prime contractor level will be able to self-perform any S/M/WBE subcontracting goals that may apply to the contract, which will allow the S/M/WBE prime contractor to perform a greater percent of the contract and further build their capacity; and
• The Bonding Assistance Program, which allows S/M/WBEs to attend the Small Business Boot Camp with Alamo Colleges and receive a letter of credit from LiftFund, is being expanded to the Professional Services Industry.
Tools to assist S/M/WBE Subcontractors (utilized on “best value” and low bid solicitation types):
• The Subcontracting Program, which can require up to 40% of a contract be subcontracted to S/M/WBEs, is being expanded to the Architecture and Engineering and Goods and Supplies Industries; and
• The Segmented Subcontracting Program, which sets subcontracting goals for certain ethnicities such as African American Business Enterprises (AABEs) or Asian Business Enterprises (ABEs), is being expanded to the Architecture and Engineering and Goods and Supplies Industries. Additionally, the tool is being amended so it will be applied to those ethnicities that are experiencing the greatest disparity per a given year and industry based on the most recent S/M/WBE utilization data.
On May 2, 2016, the SBAC voted in support of the proposed amendments to the SBEDA Ordinance. SBAC’s role is to advise the Mayor, City Council and the City Manager on business issues, goals and related policies concerning the SBEDA Program. The committee meets on a monthly basis to review program results and oversees the variety of issues related to optimizing the program. If needed the committee also proposes recommendations to modify the policies and procedures established in the SBEDA Program.
The proposed amendments will add to the current tools the SBEDA Ordinance utilizes on City solicitations, which will enhance the City’s utilization of S/M/WBEs.
ALTERNATIVES:
City Council could decline to adopt the amendments to the SBEDA Ordinance and keep the program as currently implemented. However, this could negatively impact the City’s utilization of S/M/WBEs on City contracts.
FISCAL IMPACT:
There is no fiscal impact as potential amendments to the SBEDA Ordinance are intended to enhance the program at no additional cost.
RECOMMENDATIONS:
Staff recommends the continuation of the SBEDA Ordinance along with the adoption of amendments to strengthen the program.