DDA Backs Construction Policy

February 13, 2004
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GRAND RAPIDS — Making minorities 5 percent of a project’s subcontractors would be worth up to $30,000.

Making females 5 percent of a project’s subcontractors would be worth up to $40,000.

Making the construction industry more diverse would be priceless.

At least that is what members of the Downtown Development Authority felt last week when they unanimously adopted the city’s new Equal Business Opportunity Construction Policy, which uses carrots instead of sticks to get more work for people of color and women.

The key carrots in the race- and gender-neutral policy fall into five areas of bid discounts and six other strategies. As for the discounts, general contractors can collect a sliding-scale discount based on the percentage of minority and female suppliers they include in their bids. The more on board, the bigger the discount — with the largest being 5 percent, or $100,000, whichever is lower.

Discounts range from a half-percent for up to 2.5 percent minority inclusion to 5 percent for an 18-percent minority participation. A builder could collect a 2 percent discount by including female subcontractors as 5 percent of a bid. The bid discount is higher for women-owned firms because there are fewer of them in the field.

“The objective was to give businesses the opportunity to choose how they wanted to get involved,” said Alex Thomas of the city’s Equal Opportunity Department (EOD).

Thomas reported that the city wasn’t completely comfortable with its former program, the Minority and Women Business Enterprise policy, which required 11 percent minority participation and a 1 percent involvement of firms owned by females.

Often the city had to issue waivers because contractors said they couldn’t find enough minorities and women to meet the requirements. So after meeting with industry members, Thomas said it became clear that the city should try incentives to get more involvement for both groups.

Still, a contractor that doesn’t have minorities or women included in a bid can get the award if that bid is the lowest. But the city isn’t required to award a project to the lowest bidder. And the new policy, unlike the old one, doesn’t contain an appeal process to contest the awarding of a project.

“There is no appeal process for a contractor. Their bid is their bid,” said Thomas, who noted that minority participation was 6.5 percent in 2002.

Although he supported adopting the new policy for all DDA building projects, Mayor George Heartwell indicated that the city needs a policy based on race and gender. He was concerned that the new program would take the city back to 1990 and 1991, the years when minority and female participation in local projects dropped from 13 percent to less than 1 percent.

Heartwell also felt the city “took the easy way out” by adopting a race- and gender-neutral policy instead of being willing to fight a likely court challenge to eliminate both factors.

“Benevolent or not, I do have some hope for this policy,” said the mayor.

County Commissioner Paul Mayhue also supported the new policy, but did express some reservations about how successful the program could be for minorities and women.

“I’m still concerned about the race-neutral aspect of this program,” said Mayhue, while adding that he liked the incentives.

Contractors can get financial incentives in five bid areas and by becoming involved in six other strategies contained in the policy. More information is available from EOD.

EOD said the Association of Building Contractors, the American Council of Engineering Companies, the Association of General Contractors, the Community Relations Commission, the Hispanic Center of Western Michigan and the West Michigan Minority Contractors Association participated with the city to create the new policy.    

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