When the U.S. Department of Transportation began asking federal, state and local governments to meet goals under its Disadvantaged Business Enterprise program, the idea was to increase the number of women and minority-owned businesses competing for federally funded transportation contracts.
While the federal government has largely been meeting its own DBE goals since implementing the program in 1983 – spreading its contract dollars almost evenly to an assortment of minority and women-owned firms – the Wisconsin Department of Transportation is failing to meet its DBE goals in a truly inclusive manner, according to Ugo Nwagbaraocha, president and owner of Milwaukee-based Diamond Discs International and head of the National Association of Minority Contractors Wisconsin chapter.
lthough WisDOT is mostly meeting its overall DBE goals, Nwagbaraocha points to data from the past four-and-a-half years that shows the lion’s share of that money has gone to businesses owned by white or “non-minority” woman-owned firms: about 61%, or $80.2 million, of DBE dollars paid out in 2021 alone.
Of the total $132 million in DBE contracts paid out to woman and minority-owned firms last year, about 9%, or $11.5 million, went to Black-owned businesses; Hispanic-owned firms netted $22.6 million, or 17%, of those contract dollars. Firms owned by Asian-Pacific Americans, Native Americans and Subcontinent Asian Americans received the remaining 13.5%, or $17.8 million, in commitments of the total DBE spending for the year.
“I think we can all say that was not the intent of these programs,” Nwagbaraocha said, calling the disparity in funding between non-minority women-owned firms and minority-owned firms “glaring.”
In the first half of 2022, firms owned by white women received just more than $46 million in DBE commitments, while Black-owned firms have received about $9.7 million and Hispanic-owned firms just over $2.2 million.
An activist for contractors of color, Nwagbaraocha has long lobbied to get the state to take a more active role in helping minority-owned firms better compete as both prime and subcontractors for federally funded projects.
Advocacy is especially important now, he said, as WisDOT begins to sort out how it will spend an additional $1 billion in federal formula funding as well as millions more in additional federal grant dollars as part of the $1 trillion bipartisan infrastructure deal, officially called the Infrastructure Investment and Jobs Act. Nwagbaraocha wants to see WisDOT put a greater focus on ensuring minority-owned contractors and subcontractors have the awareness and time to effectively enter bids.
“The (data) shows me that the state of Wisconsin not only needs to be more purposeful and more intentional in its efforts, but that NAMC needs to be more involved in the planning stages,” he said.
Specifically, Nwagbaraocha would like to see more opportunities for strategic unbundling, which would give smaller contractors the ability to know about the subcontracting opportunities on prospective jobs. He also thinks more state and federal grant funding should be allocated to help ethnic chambers of commerce hire full-time staff who can stay abreast of all the contracts available to their members.
“All these people who are on the NMAC board already have full-time jobs running businesses, so it becomes crucially important to have someone in-house who knows the construction industry and can help our members compete,” Nwagbaraocha said. “Every week there are probably dozens of (public works and other committee) meetings that we are not at that we should be at.”
Making an effort
As for what it’s doing to increase the amount of federal contract funds flowing to non-woman, minority-owned businesses as part of its DBE goals, WisDOT’s office of public affairs noted a variety of programs aimed at increasing minority-owned firm participation in the program. Those initiatives include mentor-protégé pairings; one-on-one business coaching; a mobilization loan guarantee program to aid DBE firms in obtaining capital; and efforts to help DBE firms prepare the necessary reports for obtaining loans.
Agency staff pointed to partnerships with Scale Up Milwaukee to offer business development course scholarships to DBE firms and with UW-Whitewater’s Small Business Development Center to offer business development and financial reporting services to help DBE firms obtain loans. WisDOT also organizes networking opportunities for DBE firms to meet prime contractors, staff said.
Additionally, the Wisconsin Department of Administration highlighted its Supplier Diversity Program, where it employs a Minority Business Enterprise certification. According to a 2021 fiscal year report, of the $344.9 million spent in the DOT State Highway Program, $27.9 million or 8% was spent with MBEs.
“In May, we announced a 6.34% total spend with MBEs and disabled veteran-owned businesses, the highest recorded share of overall state spending since the program began in 1983,” a DOA staffer wrote.
At the City of Milwaukee and Milwaukee County, where individual departments exist to help small businesses benefit from federal, state and locally funded contracts, officials say they are always working to engage and help minority contractors.
Although it has to meet DBE goals on federally funded contracts, the city also has Small Business Enterprise goals to meet on city-funded projects, said Nikki Purvis, chief equity officer of the city’s Office of Equity and Inclusion. The city’s SBE goals are race and gender neutral.
“On an annual basis, we look to award 25% of our construction contracts, 25% of our business service contracts and 18% of our professional service contracts to SBE firms that certify with the city,” Purvis said. “That also translates to city-funded private development projects like Northwestern Mutual Tower and Commons and Fiserv Forum.”
In addition to reaching out to ethnic chambers of commerce to ensure that they know about contract availabilities, the city is wrapping up a disparity study that could lead to implementing a race- and gender-specific program. The results of the study are expected in September, Purvis said.
Lamont Robinson, director of Milwaukee County’s Community Business Development Partners, said county departments have a charge from County Executive David Crowley to increase spending with minority- and women-owned businesses.
The group has established an equitable contracting committee that has been looking at what obstacles can be removed “to create a more diverse and inclusive bidding process” for minority contractors, said Robinson.
There has been talk of extending the deadline for requests for proposal, in order to allow firms more time to put together competitive bids for prime subcontracting opportunities.
“We know that insurance can be a barrier, so we are also considering implementing a supplemental insurance program,” Robinson said. “We’re also working to engage with chambers, the communities, the businesses to say, ‘Let’s start fresh. We want to introduce you to all the contract opportunities that we have at the county, availabilities everywhere from the airport to the zoo.’”
Robinson also noted that WisDOT has been holding monthly meetings with stakeholders for about a year that are focused on improving minority firm involvement.
“I deem it to be a very sincere effort,” he said. “There has been really good discussion. We know this won’t be fixed in a day. But we also want to be very transparent.”