Behind the Headlines – October 21, 2016

Behind the Headlines – October 21, 2016


(female announcer)
Production funding
for Behind the Headlines is made possible in part by.. – The efforts to support
minority business in Memphis tonight on Behind the Headlines. [theme music] I’m Eric Barnes, publisher
of The Memphis Daily News. Thanks for joining us. I’m joined tonight
by Joann Massey. She’s director of the
office of business diversity and compliance for the
city of Memphis. Thanks for being here. – Thank you for having me. (Eric)
Darrell Cobbins runs his
own commercial real estate firm and is also an
advocate for these issues. Thanks for being here again. – Thank you. (Eric)
And Bill Dries, senior reporter
with The Memphis Daily News. So, Joann, you
started in February. We’re tried to have you on a
couple of times but obviously this is an ongoing issue. We did a show I think around
February right when you had started on some of these issues. But what have you.. Let’s start with what have you
learned being with the city for six months. What the city was trying to do
right in terms of increasing minority contracting and the
disparity that we all know. What was the city doing right
and what was it doing wrong? – Well, that’s kind of a loaded
question but I will say that some of the efforts that we have
had in the past have missed the mark but they had
really good intentions. And so, it’s now a matter
of bringing together those intentions, the will
of this administration, and the community,
and the resources. And that’s really what’s
always been missing is the additional resources. Our staff went from three people
in contract compliance to we now have a staff of seven full-time
people and two part-time people. So, the man power along with the
data from our disparities study and then the software. We have a system called B2Gnow
that allows us to have a more complete comprehensive
picture of what we’re doing in city contracting. And then, how we’re
spending with minority and women owned businesses. – Did you find a resistance to
contracting with minority and women owned businesses or was it
more of a kind of passive choice not to do so? You know what I’m
trying to get at? Why was it? What was the number and what is
the number now in terms of the percentage that goes to minority
and women owned businesses? And what causes
that to be so low? – So, the number has.. As of June 2015,
it was about 11%. So since then, we’ve increased. And this is as of
August of 2016, we’re at about 14%. So, given those numbers,
that’s about a 17% increase over the time. By no means, I wasn’t there. So, I can’t say, you know,
who, why, and what. But based on my
observation and my assessment, it was definitely not
because people didn’t want to. It’s a matter of having a
strategic strategy with all resources aligned and
everybody on one page. And that’s what Mayor
Strickland has been able to do. His mandate is to city
government and to everyone on staff that we all are
responsible for increasing these numbers. So, it definitely
wasn’t they didn’t want to. It was just a matter of how and
having one consolidated office where people could
go to ask questions, get resources, and provide
them information and access to the vendors. – So, we’ll come back
to some of those things. Let me get Darrell in. You’ve been an advocate
for these issues and you’re involved in it. You’re on the show talking about
these kinds of things before. Do you see a difference now? And there’s kind of
two parts to this. One is the amount of money that
is going to the city or from the city to minority and
women owned businesses. So, the contracting. But there’s also.. I mean, a lot of conversation.. You and I have talked about it. There have been forums about
just private businesses making choices about who they
contract with and so on. So, do you see things changing? Because again, you’ve been
following this stuff and advocating for
this for a long time. – Yeah, I do see movement. But as I’ve said before, I
think what we need is momentum. And so, when you
look at government, both city and county,
you see they’ve both done disparity studies. You see they both have
established tax forces to develop strategies that can
provide long term outcomes, that get us where we want to be. What I’m looking for really
is sort of the private sector equivalent of that. And, you know, there have been
efforts at the Chamber and the Chairman’s Circle is
putting forth some efforts. But I think what we have to have
is sort of a locking of arms across both public and private
sectors to move the needle. – A lot of the time, too.. And Carolyn Hardy who couldn’t
be here because of scheduling, but the current president
of the Memphis Chamber, African-American woman with
an amazing story and amazing business experience, you know,
has talked about some of it is hurdles, some of it is choices. I mean, there’s a whole series
of issues that come together for private businesses on why
they’re comfortable with the contractors or the
subcontractors they have. I mean, how do you.. And we’ll go to Bill. But how do you kind of push
that and get people to think differently and sometimes
really the starting point? – Well, I think you have
to have some examples. And, you know, a couple of
the efforts that are underway through the Chamber I think
are beneficial where there’s a mentor protege program where you
have to have an opportunity for relationships to be developed. You know, people do business
with people who they know and like and have confidence in. And we have to foster
that in some cases. You know, the other aspect of
this though I think is just in terms of looking at the
Memphis economy historically and understanding that there are
economic disparities that exist. And as a community, we’ve done
an admirable job thus far of looking at workforce development
through GMAC and other efforts to help people become skilled
and equipped to participate in the economy. And the flipside of that and
thinking more in terms of equity and having a stake, I think
we have to place some level of priority on the business
ownership and entrepreneurship opportunity to the point
where you get to actual wealth creation as opposed
to just simply income. – Bill? – Joann, as we tape this
program in the last week, your office, the administration
have announced some action around the percentages,
which for people who don’t know, when everybody gets around the
table at city hall and starts talking about this issue, the
issue is what’s the percentage on this contract. What was the goal and where is
the actual percentage on it? So, tell me what this new step
is that’s been announced in the last week on that. – So, the new step is not
something that’s actually brand new but something that we are
committed to applying to all projects where we can. And so, what it is, is
participation goals. And on each project, we’re going
to be setting going forward separate goals for
minority businesses and for women businesses. Historically for the majority of
the projects and especially in the last few years, it’s
been just a combined goal. So, for example, if
you set a 31% goal, then the prime contractors who
are utilizing sub contractors through the MWBE program can do
any combination of minority and women businesses
to meet that goal. What we’re doing and what we’re
able to do through our disparity study results is to actually
look at the availability in our community and the utilization
and set separate goals for minorities. We know that the majority of the
businesses in our community and even on our MWBE
certified and registered list are minority companies. There are some women
owned companies and it’s a percentage of. So, in being fair, we’re going
to be setting goals based on that percentage of
minority businesses that can, that are qualified, willing,
and able to do the business, and then a goal for
women businesses. And we think that will allow us
to target opportunities more to those groups that are
disadvantaged in city contracting and also allow us to
really meet the number one goal of addressing the disparities
that we have in contracting. – I think that’s an important
point because you guys at The Daily News have
written about it. It was written about in other
publications recently about the Ikea project and where the
outcome was that there was no African-American firms
received contracts on that signature project. We actually made an exception
for through the EDGE PILOT process to create the
avenue for a retailer. And so, the points that Joann
is making where you segment out goals based on, you
know, minority women or African-American,
whichever the case may be, I think we have to get down to
that granular level to insure that the outcomes that we want
to see occur in the places that we think they should. – Because by the
broad MWBE category, IKEA met the goals but
it was by the numbers, by the rules that existed
at that particular time. – And in a community that is
63% African-American for no African-American
firms to participate. – But there were women owned
businesses that were hitting. That’s how they hit
their goal basically? I mean, I don’t know that there
was something bad going on or intentionally bad going
on but that’s how it came. – But it’s very important to
clarify that this practice that we’re implementing is
on city contracting. So, we’re wanting
to set the example. And that’s what we’re doing here
period in this administration. We’re wanting to set an example
for all of our boards’ and commissions’ agencies
and the private sector. So, this change does not
mean that EDGE will go to that granular level as
Darrell indicated. But it does mean that we’re
showing how it can be done. And again, like I talk about
all the time with my team about best practices. – Well, EDGE derives its
power from city government. So, hopefully we can see that. – But that’s an
important qualification. EDGE did put.. They changed their guidelines
for minority participation for companies that do get PILOTs. Were you happy with the
direction they took on that or are you familiar
enough with it to say? – I’m generally familiar
with it and followed it. And I’m pleased in the sense
that there was some who were making the argument that
there should not be a diversity policy at all. We should just keep it open
and hope that things work out. – Not to interrupt you but
another string of people who said there need to be
hard requirements period, end of story. And if you don’t get that, we’re
going to claw back the claw back, which the site consultant
people and development people say well, no one
is going t come. So, it’ll just kill it because
they’re not going to take that risk. And so, you were
happy generally. – I think the outcome was
sort of a middle ground. – It was a middle ground where
the good faith effort was what was always measured. And so, now they’re actually
looking at those hard percentage goals and insuring that
those are met on the projects. – They also, and I won’t name
the company because I don’t have the facts in front
of me, but EDGE, Reid Dulberger, announced
they’re going to potentially claw back on a
PILOT that was done, a kind of a
smaller, less, you know, prominent one. And the company just was unaware
that requirement was in there and it sounded like in the way
we wrote the story that it was just a massive misunderstanding. Now maybe who knows what? But that’s a first I think for
EDGE to threaten to go back and say, look, you just got a PILOT. You got big tax relief and you
didn’t do anything about it. It’s on our website. I won’t name the company. – It’s a big.. To me, that type of effort
in what we’re doing is a big example of intentionality. It’s all about intentional. It’s all about, you know, being
strategic and focused on helping minority businesses and women
businesses grow but also in how we are targeting opportunities
and doing spending with those businesses. – Because when this
goes to the city council, when you say we hit this and
here was the goal in terms of the percentage, here is what we
actually did on this particular project for MWBEs, the first
question from probably several council members is
going to be, okay, what was the percentage
of black owned businesses, what was the percentage
of women owned businesses. So, the discussion
has been going there. It just took a few
steps before to get there. – Right. And we’ve always been
providing that information. But again, like I said, this
opportunity on the projects and just as an example, if you
have 27 minority companies, understanding that minorities
make up and how it’s designated with the federal
government, African-Americans, Native Americans,
Hispanics and Asian-Americans, that’s the minority group. You have 27 minority companies
and four white women businesses. How are we looking at being fair
in creating equity in providing opportunities if we
don’t separate the goals. How could we possibly say it’s
fair if that 31% that I talked about is met by total, just
by women owned businesses. That’s not really fair. That’s not
addressing the disparities. And that’s what we’re trying to
do by separating these goals. – Darrell, did you have a point? – Well, I was just going to say
that I think that it’s important to sort of place this entire
conversation in context both locally and nationally. From a local standpoint,
minorities make up roughly 70 some-odd percent of
the Memphis population. And if those folks
aren’t succeeding, then Memphis really
isn’t succeeding. But in a macro sense, cities
across the country are having these exact same conversations
about economic inclusion and I’m involved with
a group through the Annie E.
Casey Foundation. I know the national league
of cities is and Memphis is participating in an effort
with other cities to look at the economic inclusion
strategies and so. You know, in the national media,
when you hear this term income inequality, which I
tend to talk about, you know, sort of the income gap
because I don’t think incomes will ever be equal. But it’s a national phenomenon
and when you boil it down to the local level, economic inclusion
is really a big piece of that. And minority and women owned
business is one component of what should be a
larger group of strategies. – And this is pretty complex
in pursuing what seemed like simple, basic goals here. But you have to also certify
that a minority owned business is in fact a
minority owned business. And there’s been a lot
of discussion about the certification process. So, where is the process of
looking at that and possible changes to that to make it do
what it’s supposed to do but also make it a bit easier? – So, just a
couple of months ago, I was in Chicago and I was in a
group of about 500 of my peers who do this type of work that I
do in diversity and compliance. And everyone in the room, the
majority of the people in the room agreed that some type
of certification process was necessary. Otherwise, you open the door
for potential fraud and fronts. And we have to know that
companies are who they say they are. It’s not science. But in the same token, we want
to make it easier for minority and women owned
businesses to do business, especially with government. And we don’t want to
create undo barriers. So, right now for us, we
are looking at the process. We are looking at those agencies
that we have partnered with in the past and trying to create a
different system and a change in how certification is done. We also.. And I’m very happy that our
city council was able to see and understand the importance
of reciprocal certification. So, now Shelby County’s
locally owned small business certification that they already
do and have done for many years, we will be able to accept that. Their EOC Office
verifies race and gender. And we will accept that
because it is government, right? You sign an affidavit
to say who you are. So, if there’s any fraud,
they’ll sign an affidavit on our side and on the
county side already. We’ll accept that and they’ll be
able to be certified as a small business enterprise
through our list. – I was at a thing where some
general contractors were talking more on the private
sector side but that, you know, the percentage
of minority businesses was questionable. They said, well, in
a couple of cases.. And they weren’t saying
there wasn’t a problem. So, I don’t want to
frame this incorrectly. But that in a
number of instances, there were minority owned
businesses who weren’t certified and so weren’t counted against
that percentage because the certification process, this
is on the private sector side, was just too complicated. They said I got to
get to work, you know. I can’t spend all this time. So, that’s partly what you’re
talking about on the city, the governmental side that it
used to be if you were going to do work with the county, you
had to get one certification, the city, a
different certification. Is the schools a whole
other certification? I mean, there’s just too many
hoops is what people will say. – Exactly. And so, again, as
I said earlier, we’re trying to lead the
way with best practices. This is a system. We’ve been here now.. Mayor Strickland’s been
in office since January. I came a couple of months after. So, this wasn’t all
created overnight. You know, this
structure that is a barrier. And it won’t be fixed overnight. But we’re working on that. It is very
important to note, too, though, we’re not
satisfied with these numbers. But of the non-certified
minority spin that we’ve had in the past, it’s been even higher. So, there are
firms, as you said, Eric, that won’t go through
the certification process. But you look at me,
you look at Darrell. We know who we are. We know our race. And you can see it clearly. That’s how we’re
working with business owners. We can see it but it needs to be
documented properly on paper in order for us to
actually count it. And that’s the important part. So, whoever comes up with a
system in an open portal and all those things, those are just
things that we really have to look at very closely. – I want to shift a little bit
back to something Darrell was talking about with
entrepreneurship, and ownership, and,
you know, equity, and wealth creation. Your office, you
work with Start Co on.. It starts next week, right? Talk a little about the Propel
program because this is very interesting and different than
I think what we’ve heard in the past and some of the efforts
coming out of your office. – And it goes back to that
dedication of resources. So, with Start Co, we’ve seen
the successes that they’ve had in general in the community with
helping start-up businesses and small businesses grow. And so, we approached
them about creating a minority business accelerator. And I want to repeat
that because it is minority business accelerator. We have other accelerators in
our offices that are more open to general small businesses. So, this isn’t excluding anyone. This is just one that is
targeted to minorities. This accelerator will basically
help businesses to grow their capacity and refine their
pitch and approach to customers. It’s going to cultivate. It’s going to be a combination
first of what Start Co provides in helping, you know, helping
their businesses build their customer base,
identify their customer, develop their pitch. Exactly. And then for us on our side,
we’re going to be coming in and working with them. We’re going to be having a
Black Business Association. Ruby Williams is going to be
working with us and some of the other partners on
city contracting. How to do
business with the city, how to fill out the
bids, what’s needed. So, that combination is going
in and we’re very excited that we’ve already gotten some
private sector partners to agree to have what we’re
going to call a pitch day. So, like Start Co has
had their demo day, we’re going to have
some private sector folks. The Chamber is on board. Carolyn Hardy. International Paper has agreed. FedEx has agreed. And they’re going to all
come together to hear those businesses give their pitch. How often are
minority businesses, when we talk about opportunities
and that networking, how often are minority
businesses able to be in a room full of potential customers
having had this practice and being able to get it? It’s amazing. – And I’m glad you
said it that way, too. It’s not just to help people
contract with the city or the county. This is to contract with FedEx,
to contract with any business here or around. – Exactly. So, the other
side of our office.. You know, we have two units. We have the business services
and contract compliance. Business services, which was
derived from what MORE was, Memphis Office
Resources and Enterprises, is about helping
businesses build their capacity, helping them go from being
subcontractors to actual prime, and helping them identify
private sector opportunities. – Alright. Darrell, a couple of years ago
you and Ron Redwing and a number of business and political
leaders kicked off this renewed effort at the National
Civil Rights Museum. In that time, how would you
measure the progress that’s been made on business to business
participation in particular? – Again, I would say
that there is movement but we need momentum. I think the Chamber has stepped
up in a major way and over probably the past year
and a half had a task force established that is coming
forth with a number of different strategies and steps to
address that on the B2B side. But, you know, there are other
organizations in town that wield a lot of influence and power,
like Memphis Tomorrow and others who, if they come alongside
the Chamber and the Chairman’s Circle and other groups, I think
we can make some real progress. – How important for a black
owned business is having a government contract as a step to
a business to business contract? – It’s huge. You know, I have a
very close friend. I won’t mention his name but
five years ago it was him and one other employee. He’s had a series of smaller
government contracts and had the opportunity to get one large one
and has gone from two employees to 30 employees in
about five years. And that, to me, is sort
of a prime example of, you know, you hear a
lot about capacity. And I think capacity can be
garnered through examples like that. You know, if you
have two people, you can’t do a whole lot. But when you can build up your
experience and your track record and expertise and
garner larger contracts, you’re able to
grow your capacity. – Because sometimes the thought
is that these are two separate realms and they both
actually feed each other. – And that’s why Mayor
Strickland merged our office and that’s why programs like
our shelf to market program, the SBE, where only small
businesses are competing against other small
businesses is important. I agree with Darrell that
the equal business opportunity programs are meant to help
businesses grow capacity so that they can take on
larger opportunities in the private sector. – Again, I’ll go back to
contracting and some of the big general contractors
at the thing I was at, they were talking about
a mentorship program. They, you know, work together to
try and build small contracting in the various
whether it’s electricians, or masonry, or whatever. Those kinds of things,
how important are those? And do you work with businesses
in specific industries to try to encourage them? Because you can only do so much. The government can
only do so much. But it does take that sort of
mentoring and connections and networking. So again, there’s one example of
the general contractors in the city who do some sort
of program like that. Are you trying to encourage
other businesses to do that kind of thing? – Absolutely. We have a program that we call
it our Lunch and Learn series. And it’s a sub meets prime. We’ve already had Montgomery
Martin to step up to the plate. He was actually our first sub
meets prime company that came. Actually did a Lunch and Learn
with sub contractors who were interested in doing
business with him. And he’s spent two hours just
talking about the opportunities he has. And so, we’re doing those. The companies, it doesn’t
cost any tax payer money. The companies pay for the lunch. We provide the facilities there. We’re doing those
types of things. We’re also
encouraging joint ventures. And in addition to that
through the participation goals, it’s not just working with
the minority and women owned businesses, the
small businesses, but the actual prime
and the contractors. We’re hoping to educate them
on how to do this as well. – Alright. Well, that is all
the time we have. Thank you for being here. Thank you, Darrell. Thank you, Bill. Just a reminder early
voting has started. It started yesterday. We’ll cover the election next
week and some of the things that are on the ballot. Tune in next week. Thank you for joining us. Join us again next week. [theme music]

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