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Initiative aims at more minority participation: Construction group says current strategy not working

May 21, 2007

More needs to be done to improve minority involvement in the construction industry than simply employing a certain percentage of the companies on projects.

That's the consensus of the Indiana Construction Roundtable, an organization made up of some of the biggest users and providers of construction services.

Its diversity outreach initiative aims to increase minority participation within the trades by rewarding contractors who support education and training, employ minorities and women, and mentor small minority- and women-owned businesses.

The initiative still contains the tenet embraced by both the private and public sectors requiring specific dollar amounts on projects be spent with women and minorities. But supporters predict the new goals will help attract a more diverse work force to the construction sector and, ultimately, produce and grow more companies.

"Here we are in 2007 and our base of W/MBE contractors and their capacity is no more than it was 10 years ago," said Gary Price, ICR president. "Go to a construction site and try to find a minority or woman contractor. There aren't many."

ICR leadership approved drafting the initiative in October 2005 and now is beginning to roll it out. By June 1, ICR corporate members such as Eli Lilly and Co. and Clarian Health Partners are to decide whether they will participate in the program. A July forum to educate contrac- tors about the new system is scheduled as well.

Upon bidding on a Lilly project, for instance, contractors will include their amount of involvement in the diversity initiative. A point system established to grade a contractor's participation will be used to determine who gets the job.

The idea is that contractors vying for the jobs will do more than hand women and minorities a slice of the work, or risk losing out on a contract.

Currently, goals in construction focus on determining what percentage of a project's total cost should go to minorities and women. A typical "set-aside" might be 10 percent to 15 percent.

In reality, contractors have found loopholes around the quotas. Some develop "pass-through" relationships with certified minority- and women-owned businesses, where checks are written to a minority contractor, but most of the money goes to a larger, non-minority-owned firm.

Part of the problem, contractors say, is there simply aren't enough minorityowned businesses to meet demand. Further, many are small startups that lack capacity to handle million-dollar contracts.

Many in the construction industry have grown weary of the games and don't want to play them anymore, said David Moore, the ICR's executive director. Their concerns prompted Doug Morris, ICR member and vice president of operations and facilities at Clarian, to explore the issue.

His document, dubbed the "Morris Plan" within the industry, bluntly acknowledged that 20 years of attempts to increase the number of women and minorities working in construction had failed.

His plan concluded that if true progress is to be made, a new system for measuring participation is needed.

Any progress will take time to measure, Morris said.

"I really believe it can be extremely effective, but I also think it has a long way to go," he said. "It's not a quick-fix process."

Stephen Watts, president of Top Quality Glass & Mirror Co. Inc. on East 38th Street, helped draft the initiative. The 50-year-old launched his company full time in 1993 after starting in the glass business at the now-defunct Brooks Plate Glass as a teen-ager fresh from high school.

Hired from an affirmative-action program, Watts chose to build his business without any assistance afforded him. Until five years ago, he declined to pursue minority business enterprise certifications offered by the city and state necessary to participate in public projects. Today, the commercial glazing contractor is a union shop that employs 50 people and has annual revenue of $5 million.

Still, he supports the ICR's efforts to attract more women and minorities to the construction industry.

"There's nothing that's had an impact, from what I've seen," Watts said. "So what's going on? Why aren't there more strong W/MBEs in central Indiana? My opinion is that the past practices-the good ol' boy network-are still in place. They reach their goals and everybody is happy."

Steve Corbitt, president of Corbitt and Sons Construction Co. Inc., likened "setasides" to giving a 15-year-old $1 million.

"Will he spend it wisely?" Corbitt asked. "Percentage goals are certainly a way to help grow minority business. But also the other piece is education and training. These are the types of things that will create a good foundation for minority businesses."

How many corporations will adopt the measures is unclear. But Bill Shrewsberry, president and CEO of engineering consultancy Shrewsberry & Associates LLC, thinks Lilly and Clarian carry enough heft to convince others of the initiative's benefits.

The hope is that the public sector will embrace the guidelines as well, although legal obstacles stand in the way. City and state government often must award contracts to the lowest bidder and might not be able to consider additional diversity initiatives, besides percentages. A public owner task force has been formed to investigate solutions.

Some of the recommendations are already being adopted at the state level, however. A mentor program is part of the $675 million stadium project. The state also is auditing past contracts to make sure minority- and women-owned subcontractors were actually used as promised.
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