Despite efforts to diversify its suppliers, the Louisville Metropolitan Sewer District still awards most of its business to companies owned by white men, a third-party study released this week found.
The analysis by public policy consulting firm Mason Tillman Associates, Ltd found these businesses received the vast majority of more than 4,000 contractor purchase orders between July 2010 and June 2015. In total, these 4,000 contracts represent more than $824 million of business.
The study divides the purchases orders into two categories: prime contractors and subcontractors. MSD deals with the prime contractors directly, while subcontractors are hired by other parties.
Of the prime contractor purchase orders for construction projects, about 42 percent of the available companies were owned by white men. But when it’s broken down by dollars, that group received more than 95 percent of the money MSD spent in that category.
In contrast, African-American-owned businesses made up about 30 percent of available prime construction contractors, but received less than one percent of MSD’s purchase order dollars.
The difference was a bit less stark in the construction subcontractor group.
White male-owned companies represented about 61 percent of the available subcontractors and received about 69 percent of subcontract dollars. White female-owned businesses represented about 15 percent and received about 12 percent of dollars, and African-American companies represented about 18 percent and received about 8 percent of dollars.
MSD executive director Tony Parrott said the agency will strive to employ more diverse local businesses.
“As a large organization, it is our responsibility to assume leadership to increase supplier diversity with our procurement that will reflect the community in which we live and work,” he said in a statement.
The study found statistically significant disparities in prime contracts to African-Americans across all four categories considered: construction; construction-related services; engineering and professional services; and materials, commodities and services. The same was true for businesses run by white women. The analysis also found disparities in some categories for Hispanic Americans, Asian-Pacific Americans and Asian-Indian Americans.
Factors such as a “good old boys” network and difficulty obtaining finances were identified as barriers to earning contracts, based on one-on-one interviews and focus groups with vendors, the study’s authors wrote.
Mason Tillman offered recommendations for improving MSD’s procurement process. It suggested adding to MSD’s Supplier Diversity Program staff, creating an advisory council of minority- and women-owned business enterprises and helping such companies get access to capital by using MSD’s banking relationships. MSD should also create a program for small businesses located in Jefferson County and aim to award 15 percent of contracts to these, the consultant said.