Harris County spends $3.7 billion dollars a year yet does not have a small or minority business program that ensures entrepreneurs receive their fair share of the dollars. Precinct One County Commissioner Rodney Ellis is going the extra mile to build the case for establishing a business program that will reflect the county’s demographics.
Ellis, a former Houston City Councilmember and state senator, was elected commissioner in 2016. The late El Franco Lee held the office from 1985 to 2016.
In an exclusive one-on-one conversation, Ellis explained the dynamics of what he is trying to achieve.
Defender: What are your objectives or goals related to the County and minority businesses?
Ellis:The ultimate goal of a successful MWBE (minority and women business enterprises) program is to ensure that the County’s contract spending reflects our region’s diversity, which will help strengthen our local economy, mitigate inequality, foster job growth and help create wealth in communities where it’s needed most.
The primary objective of a disparity study I have proposed is to identify the ways in which specific barriers exclude minority businesses from accessing contracting opportunities and create unfair competition at the County, which is essential for developing an effective MWBE program that levels the playing field.
Defender: Describe the process or steps that need to be taken to accomplish the goals along with the timetable?
Ellis:A disparity study is the first step the County must take to establish a race- and gender-conscious business program like a MWBE or similar initiative. A disparity study will clarify any inequities in the County’s contracting process and provide the basis to adopt a remedy, including a robust MWBE program.On May 1, wetookthe first step toward implementing a MWBE program when Commissioners Court approved an interlocal agreement that allows the County to utilize the City of Houston’s contract for a disparity study.
The vote allows the county to negotiate with Houston’s disparity study contractor to determine if the county wants to enter into a contract for the company’s service. The county still maintains the right to consider all interested vendors by issuing a request for proposal to perform a disparity study, which – if approved – will take about a year to complete.
I also plan to advocate for a small business program that – while race- and gender-neutral – can begin helping disadvantaged small businesses better compete for contracting and procurement opportunities at the county now.
Defender: What is a disparity study?
Ellis:Disparity studies compare the availability of minority- and women-owned businesses in the sectors where government contracts and procures with the level of participation of minority- and women-owned businesses in the government’s contracting and procurement processes to help identify barriers and set goals for increasing meaningful MWBE participation.
When disparities exist and are confirmed by a study, a gender- or race-conscious approach is appropriate and allowable. A disparity study also helps governments legally justify a MWBE program by ensuring the program meets a compelling governmental interest – in this case, remedying past discrimination in contracting and procurement – and is narrowly tailored to further that interest.
Defender: Explain the county budget and what potential opportunities are available for minority contractors?
Ellis:The County wields a tremendous amount of spending and purchasing power. Over the past several years, Harris County has paid billions of dollars to companies for contracting, consulting, and procurement services provided to the County.
Local government contracting can be a significant source of economic opportunity for MWBEs and can play a central role in helping these businesses grow their company, create jobs in their communities and stimulate our region’s economy.
Defender: Why is it important the county have a minority business program?
Ellis:In one of the most diverse regions in the country, minorities and women help drive the local economy as small business owners and entrepreneurs in key industries. But far too many minority and women business owners have encountered roadblocks on their path to opportunity, which has undermined fair competition and held them back from reaching their full economic potential. These roadblocks include: reduced access to capital, loans and lines of credit; relatively limited social and professional networks; marketplace discrimination; and other well-documented barriers that a disparity study will help address.
A minority business program is an inclusive economic growth strategy that helps remove these barriers by fostering fair competition, which will benefit our communities. Also, when minority-owned businesses unfairly lose out on contracting opportunities with the County, so do the communities, schools, and families that would have directly benefited from the types of job creation, social development, and community-driven economic growth that successful minority-owned businesses can uniquely generate.
Defender: What is your best guess on what percentage of the business goes to MWBEs?
Ellis:Based on available but limited data from Harris County, a Vendor Payment Study was conducted by B2G Now and suggests that MWBEs are likely to be under-utilized at the County. The preliminary analysis indicates that Harris County contracts with MWBEs less than about 10 percent of the time—there is no way to know for sure without a disparity study.
According to the B2G Now findings, the County’s utilization rates of prime contractors for minority-owned and women-ownedfirms over a 5-year period are notably low, and dollars spent with minority-owned and women-owned businesses are also low. And it’s also important to note that this analysis only examines prime contractor utilization. The County does not record any information for subcontractors, which is where many MWBEs struggle to compete.
Defender: Why are you paying for the disparity study and not the county?
Ellis: I cannot meet that commitment to equitable access to contracting opportunities without the data that a disparity study will provide. That’s why I’m willing to commit Precinct One funds to pay for the study. In fact, the law requires a disparity study before an entity can put an MWBE program in place.
My colleagues believe that the current process is adequate. I believe there is always room for improvement and that we should make economic policy decisions based on sound data and evidence.
However, given the lack of comprehensive data collection, Harris County cannot claim with any certainty that our current contracting and procurement procedures are fair or inclusive. Likewise, the B2G Now analysis does not definitively prove exclusion or discrimination, but it does provide strong indicators that some disparities exist. A disparity study is the best way to clarify these questions and develop effective and inclusive economic policies like an MWBE program.