HomeMy WebLinkAboutRevised City of South Bend Disparity Study LetterFiled in Clerks
1 COLETTE
H O L T Nov zozo
& ASSOCIATES
Michael Patton
Diversity Compliance Inclusion Officer
Office of Diversity & Inclusion
City of South Bend
225 West Jefferson Boulevard
Suite 140ON
South Bend, IN 46601
8 September 2020
Re: Revised City of South Bend Disparity Study
Dear Mr. Patton:
Attached please find the revised 2020 City of South Bend Disparity Study. The new report
contains the revisions to the original 2019 City of South Bend Disparity Study. We describe
these below.
The changes do not alter the substantive conclusions and recommendations presented in the
original report. While we have corrected the availability estimates and reassessed the
geographic market area, this does not change our view that the City has a strong basis in
evidence that race and gender discrimination impede opportunities for minority and woman
firms to obtain City prime contracts and associated subcontracts. This evidentiary basis
provides the factual predicate to adopt narrowly tailored race- and gender -conscious remedial
measures. This includes setting an overall, annual target for City spending with minority- and
woman -owned business enterprises ("M/WBEs") and, where appropriate, establishing narrowly
tailored contract specific goals for MA/IBE utilization. It also includes immediately undertaking
significant race- and gender -neutral measures to reduce barriers to the participation of all small
firms, such as procuring and implementing a robust contract data collection and monitoring
system; fully staffing and resourcing the Office of Diversity & Inclusion; providing sufficient
resources to the Office of Diversity & Inclusion to fully implement the new program; focusing on
prime contract awards; conducting outreach, partnering with other entities to provide technical
assistance and supportive services to M/WBEs and small firms; and adopting a small business
target market (if permitted under Indiana law).
The 2020 Study contains two revisions: a computational error on our part, and a reassessment
of the correct geographic market area for City spending.
The error was made in forming the Master Business Availability List. This List is an
aggregation of three databases: the Final Contract Data File; the Master M/WBE
Directory and the Hoovers/Dun & Bradstreet database. The error was made in
compiling the last component. In purchasing data from Hoovers/D&B, we identified
the proper firms for our analysis. However, at the point of requesting the data
download, we neglected to override the website default limit of downloads in order to
obtain the total number of firms we desired. Consequently, the Hoovers/D&B portion
of the Master Business Availability List was smaller than it should have been. This
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was corrected in this final version. Let me stress this was in no way caused by any
action of the City. To the contrary, CHA takes full responsibility for our mistake, and
we deeply regret our error.
The reassessment involved the determination of the City's geographic market.
CHA's methodology to determine an agency's geographic market entails two steps:
first, we determine the product market by assessing which North American Industry
Classification System ("NAICS") codes contain an overwhelming majority of an
agency's spending. Next, we observe where the firms receiving these contracts are
located. In the 2019 report, we determined the geographic market of the City to be
the State of Indiana; Berrien County in Michigan; and Wabash and Kankakee
Counties in Illinois. In the course of correcting the error with the Hoovers'
downloads, we decided to review the entire quantitative analysis. Our re-
assessment concluded that we should have eliminated the Illinois counties from the
geographic market because: 1) the two counties were not close to South Bend
geographically; and 2) each of the Illinois counties contained only one contract and
this activity did not reflect sustained involvement in those counties by the City as
would be the case if firms in those counties were a regular and repeated part of the
City's geographic footprint.
Given that we were revising the report, we have added additional information to Chapter V,
which provides several data sources to evaluate the economic outcomes for M/WBEs in the
overall South Bend and Indiana economy. We have included the results of the credit surveys
conducted by the Federal Reserve Board and the U.S. Department of Commerce's Minority
Business Develop Agency. These research results provide a stark picture of the significant
barriers faced by M/WBEs in accessing commercial credit and the advantages enjoyed by White
men in interfacing with the financial markets. This is precisely the type of "passive participation"
evidence courts have looked to in considering whether, without affirmative intervention in the
market failure of discrimination, a local agency will unwittingly help to perpetuate the continuing
effects of race and sex discrimination in its contracting and procurement activities. This is
especially important for a market like South Bend's, where the low business formation rates and
the earning of M/WBEs from the businesses that are able to overcome barriers to formation
have depressed the number of firms currently available to do business with the City. The City is
not helpless to address these effects; it can make measurable progress through the use of the
types of narrowly tailored remedies we describe in our Recommendations.
We stand ready to assist the City in any way to explain the changes and the basis for our
recommendations. Please let us know if there is any way we can support you in moving forward
to create opportunities for M/WBEs in South Bend.
Very truly yours,
Cc: Stephanie Steele, Corporation Counsel