November 14, 2019 – The results of the 2019 East Baton Rouge City-Parish Disparity Study were released at Wednesday’s Metro Council meeting. The results reveal underutilization of small businesses in City-Parish contracts, particularly for women-owned, minority-owned and veteran-owned companies.
“For many years City-Parish leaders spoke of the need for a disparity study that would provide the critical data needed to change policies and realign our public investments. My administration made the study a priority and now we can progress as a community,” said Mayor Broome.
Keen Independent Research conducted the study by examining more than 11,000 City-Parish purchases from 2013 to 2017 and by interviewing more than 1,000 businesses in the Baton Rouge area. The study affirms that the City-Parish primarily buys locally, with 80% of total contract dollars going to companies within the Baton Rouge metropolitan area. More than 90% of businesses available for City-Parish contracts are small businesses. Of available businesses, 41% are owned by people of color and/or women, and 9% are owned by veterans.
After analyzing the availability of local companies for specific types of contracts, 21% of City-Parish contract dollars would be expected to go to firms owned by women or minorities. Those groups received 4% of the contract dollars.
Veteran-owned firms received 1% of all contract dollars, and all small businesses received just 10% of all City-Parish expenditures.
Keen Independent Research recommends a number of strategies to increase small and disadvantaged business participation in City-Parish contracts. The full study can be found here.
Those recommendations include:
- Developing a disadvantaged business enterprise certification program similar to programs in Houston, Atlanta, and New Orleans
- Expand bidding requirement thresholds for goods and materials contracts to create a competitive pool of small and disadvantaged businesses.
- Small and disadvantaged businesses often have a barrier to growth because there is not a line-of-credit program available for this segment of the business community, as highlighted in this study. The City-Parish is actively working with banking institutions to address this need and looks forward to launch an effort in first quarter of 2020.
Greater inclusion of firms in City-Parish contracts is beneficial to taxpayers as it will increase competition and drive down costs, as well as strengthen the local economy. It will also ensure public investments are equitably distributed among the community.
Mayor Broome has already taken steps to increase small and disadvantaged business participation, particularly in the $1 billion MOVEBR program. Roughly a quarter of all subcontractors for program managers women-owned, minority-owned or veteran-owned firms.