Inclusive Business Initiative: Establishing the Framework for M/WBE Procurement Policy Insight Center for Community Economic Development Webinar March 4, 2008, 2:00 PM

2 THE BASICS: LEGAL FUNDAMENTALS CROSON CROSON ADARAND I AND II ADARAND I AND II STRICT SCRUTINY STANDARD STRICT SCRUTINY STANDARD COMPELLING INTEREST COMPELLING INTEREST NARROW TAILORING NARROW TAILORING

3 Lessons of Croson & Adarand Strict Scrutiny Strict Scrutiny When is it required? When is it required? To examine government use of a racial preference To examine government use of a racial preference To examine government use of a racial classification To examine government use of a racial classification

4 Two Prongs of Strict Scrutiny 1 st Prong: Compelling Interest  Disparity studies & factual predicates provide a ‘strong basis in evidence’  The “factual predicate” provides a roadmap to remedies 1. Identification of where disparities exist 2. Identification of the nature & form of barriers, and root causes of disparities.

5 Two Prongs of Strict Scrutiny 2 nd Prong: Narrow Tailoring of Remedies  Consideration of “race-neutral” remedies  Consideration of appropriate “race-conscious” remedies only when it appears that neutral remedies, in and of themselves, are inadequate  Limited duration; periodic review; limited by ethnicity/gender, industry, & form of discrimination  Forms of remedies: Follow the Road Map of the Factual Predicate

6 Centralized Bidder Registration 1. Provides statistical foundation for accurately measuring availability and utilization. 2. Enhances ability to conduct targeted outreach to vendors. 3. Enhances ability to set realistic subcontracting goals.

7 Elements of a Disparity Study Quantitative Analysis Quantitative Analysis Availability of M/WBEs Availability of M/WBEs Utilization of M/WBEs Utilization of M/WBEs Disparity Analysis Disparity Analysis Causation / Regression Analysis of Disparities Causation / Regression Analysis of Disparities

8 Elements of a Disparity Study Qualitative Evidence Qualitative Evidence Anecdotal Evidence (Interviews, surveys, public hearings, etc.) Anecdotal Evidence (Interviews, surveys, public hearings, etc.) Case studies Case studies Analysis of procurement policies and practices Analysis of procurement policies and practices

9 Elements of a Disparity Study Identification of prior race- and gender- neutral remedies Identification of prior race- and gender- neutral remedies Evaluation of effectiveness of prior neutral remedies in addressing disparities Evaluation of effectiveness of prior neutral remedies in addressing disparities

10 Elements of a Disparity Study Findings & Recommended Remedies Findings & Recommended Remedies Identification of barriers to availability and utilization of ready, willing, and able M/WBEs Identification of barriers to availability and utilization of ready, willing, and able M/WBEs Active discrimination by government? Active discrimination by government? Passive discrimination by government in rewarding or perpetuating the effects of private sector discrimination? Passive discrimination by government in rewarding or perpetuating the effects of private sector discrimination?

11 Elements of a Disparity Study Findings and Recommendations Findings and Recommendations Consideration of efficacy of race- and gender- neutral remedies (de-bundling, bonding waivers, outreach, small business programs) Consideration of efficacy of race- and gender- neutral remedies (de-bundling, bonding waivers, outreach, small business programs) Consideration of appropriately narrowly tailored race- and gender-conscious remedies to address disparities Consideration of appropriately narrowly tailored race- and gender-conscious remedies to address disparities

12 A SUMMARY OF RACE- AND GENDER- CONSCIOUS M/WBE PROGRAM ELEMENTS 1. Mandatory M/WBE Subcontracting Goals Program 2. Voluntary M/WBE Subcontracting Goals Program (Good Faith Efforts). 3. M/WBE Set Asides. 4. Joint Venture Incentives. 5. Price Preferences.

13 A SUMMARY OF RACE- AND GENDER- CONSCIOUS M/WBE PROGRAM ELEMENTS 6. Linked Deposit Programs 7. Evaluation Preferences (Professional Services). 8. Targeted Solicitation or Bidding Rotation Preference. 9. Disadvantaged Business Enterprise Programs (presumptions of social disadvantage based on race / gender)

14 QUESTIONS??? Contact: Franklin M. Lee, Esq. Partner Tydings & Rosenberg LLP 100 E. Pratt Street, 26 th Floor Baltimore, MD (410)