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Savannah disparity study of regional market prompts city look at local businesses

Officials and staff in Savannah’s city government are providing more details about their procurement practices after a hired consultant found evidence of discrimination in awarding contracts to businesses owned by women and minorities.

City Manager Stephanie Cutter recently submitted a report to the City Council that explains the contracting process and steps the city has taken over the years to make sure more businesses had a fair shot at city projects and purchases.

The city’s report also focused on Savannah-based businesses after a $239,136 disparity study commissioned by the city council examined a market area that included businesses outside Chatham County.

The city issued its own report in response to the “broad picture” presented by the consultant’s study, knowing council members were more interested in how Savannah’s businesses were doing, Cutter said.

“I thought it was very important that our council really knew and understood where we were locally, whether that was good or bad, to help guide enhancements to our program,” she said.

The findings of the disparity study by Atlanta-based Griffin & Strong were based on the number of businesses in what the study refers to as the “relevant market.” That’s the geographical area from which at least 75 percent of the firms bidding for project and receiving contracts are located.

Depending on the type of contract, the size of the market area might encompass the state of Georgia, other states plus Georgia or the entire country.

The consultant’s method for determining the study area was required by legal precedent, following a 1989 Supreme Court ruling that local governments could not use preference programs unless they documented existing discrimination, said Rodney Strong, one of the consultants behind the study.

“The Supreme Court case includes a section that specifically says the proper measure is to determine whether there is a disparity between the relevant market where it purchases its goods and services,” Strong said.

The consultant determined the relevant market for construction contracts was all of Georgia after the study found only 44 percent of the bids came from businesses within Chatham County. That rate dropped to 34 percent for professional services, 33 percent for general services and 26 percent for goods and supplies.

The city’s analysis found that 5 percent of prime contracts went to Savannah-based minority- and women-owned business enterprises from 2010 through 2014. At the same time, local MWBEs submitted only 7 percent of the bids.

Those numbers indicate the city does a better job locally in awarding contracts to businesses owned by minorities and women, but those businesses have to submit bids to get the jobs, Cutter said.

“They have to bid,” she said. “Once that number goes up, surely, hopefully, their participation goes up.”

To get more MWBE involvement, the city has increased outreach efforts and educational opportunities during the past three years, according to the staff report. New standards for certification were also added to better ensure the integrity of the process. The city lists 115 businesses as certified MWBEs, 89 of which have Savannah addresses.

Certification is important because it provides a list of businesses prime contractors can partner with to meet city MWBE participation goals, Cutter said.

“The MWBE firms are relatively small, and they participate to a greater extent on the subcontractor level,” Cutter said. “That’s why I think it’s so important to provide opportunities for them to network and come together and for the primes to help us in mentoring the smaller companies to help them to grow and sustain themselves.”

Stephanie Bock, with Bock Architects, said the paperwork involved was a bit overwhelming, but her business was certified with the help of a city staffer about a year and a half ago. Since then, the contracting teams she has been a part of have not been awarded any city jobs, but she still recommends getting certified.

The prime contractors she did team up with had contacted her after seeing her business on the list.

“It’s gotten my name out there,” she said. “I get more calls.”

City staffers plan to provide the council with an overview of the contracting process during a workshop on Thursday.

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