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Oakland Council Delays Look at Contract Discrimination

By J. Douglas Allen-Taylor
Tuesday May 29, 2007

A long delayed study of fairness in purchasing and contracts by the City of Oakland has shown that minority- and women-owned firms are being discriminated against by city agencies, but contractors will now have to wait another few months to find out what, if anything, Oakland City Council will do about it. 

With two members—Council President Ignacio De La Fuente and Councilmember Larry Reid—of council’s four-member Community and Economic Development (CEDA) Committee absent for last week’s committee meeting, CEDA put over a report by Oakland-based Mason Tillman Associates which concluded that there is a “statistically significant underutilization” of minority and woman-owned business enterprises by the City of Oakland over the three-year period between the summer of 2002 and the summer of 2005.  

In addition to underutilizing minority- and women-owned businesses, the study found that city contracts in the three year period were concentrated in a small handful of businesses. Of more than $244 million in 25,000 contracts awarded during that time, 60 percent of the contract dollars went to fewer than 2 percent of the vendors and businesses used.  

The study makes no recommendations for action to correct the disparity. Such recommendations will be put forward in Volume II of the study after City Council considers the data presented in the findings in Volume I. 

But with Oakland City Council scheduled to begin a summer recess early next month, the CEDA committee will not begin consideration of the findings until September.  

An article in the Oakland Tribune last week had indicated that De La Fuente wanted to take a closer look at the study to make sure it contained enough data to make it accurate. 

Victor Ochoa, Deputy Chief of Staff for Oakland Mayor Ron Dellums, said that the 250 page study is currently being reviewed by the mayor’s office, and would have no further comment. 

Meanwhile, at least one local African-American business owner says that no study was needed to know that the City of Oakland was discriminating against minority- and women-owned businesses in letting out contracts. 

“We didn’t need the study to authenticate what we already know,” Oakland Black Caucus chairman Geoffrey Pete said in a telephone interview. “It’s something that minority businesses live with in Oakland, particularly over the last eight years during the Brown Administration. I believe that the discrimination is wilfull, intentional, and deliberate. It didn’t happen out of thin air.” 

Pete said that African-American business owners were particularly hard-hit during the Brown years, calling the situation “grim and grave.” “The city’s contract compliance office was gutted,” he added. “Local hiring was put off. The disparity study itself was put off for six years, even though it was mandated by the charter.” 

Pete, the owner and operator of Geoffreys Inner Circle nighclub in downtown Oakland and a longtime political activist in the city, is currently one of the plaintiffs in a class action federal lawsuit against the City of Oakland charging race discrimination by the city in contracting, procurement, lending, and grants. The lawsuit is currently in the discovery phase. 

The so-called “Croson” study by Mason Tillman Associates, named for the defendant in a lawsuit against the City of Richmond, is mandated by the Oakland City Charter to be conducted every two years. But the last “fairness in purchasing and contracting disparity” study was done in Oakland in 1996, and no study was done at all during the period of 1999-2006 while Jerry Brown was mayor of Oakland. During that period, there were repeated charges that the City Council and the Brown Administration were discriminating against minority-owned businesses. 

The study matched the contract dollars awarded by the city with the available minority-and women-owned businesses in the area, and restricted the prime contract amounts to under a half a million dollars to make sure that the businesses included in the study had the capacity to perform them. 

The study looked at three areas of city contracts (formal, informal, and subcontracts) across four areas of interest (construction, architecture and engineering, professional services, and goods and other services).  

It found that African-American businesses were the most underutilized in City of Oakland contracts, with disparities found in the areas of construction and professional services in both formal and informal contracts and in the area of construction in subcontracts. But the Mason Tillman study also found that businesses owned by Asian Americans, Latinos, women, and minority women were all underutilized in significant contract areas. 

In her report to City Council accompanying the study, City Administrator Deborah Edgerly listed four possible steps the council could take with regard to the Mason Tillman study. 

Among those possible actions were convening a public hearing on the report and its implications, forwarding the study to “key stakeholders” (mentioning the Black Caucus by name) for their recommendation, using Mayor Ron Dellums’ economic development task forces (which Edgerly called “an excellent source”) to gather community-based ideas and recommendations, or appointing a business working group to gather public feedback.