Council imposes penalties on vendors that don’t meet minority-contracting goals

The Indianapolis City-County Council on Monday approved a measure that gives teeth to the city’s minority-contracting program.

Proposal No. 231 amends the code governing the Office of Minority-Owned and Women-Owned Business Enterprise to strengthen oversight of bidder commitments to meeting city expectations regarding the utilization of minority-owned firms.

The changes would allow officials to withhold payments from vendors, terminate their contracts or disbar them from future city contracts if they don’t comply with the program.

The council voted 20-5 along party lines to approve the changes, with the Republican caucus casting the no votes.

The proposal calls for conducting a disparity study every five years and creating a utilization plan for minority-owned, women-owned, disabled-owned and veteran-owned businesses based on the disparity study’s results. Every city and county contract would be subject to adhering to the utilization plan.

Currently, city code calls for utilizing minority-owned, women-owned, disabled-owned and veteran-owned businesses (also known as XBE) for public works projects and procurement of goods and services for at least 27% of the dollars spent—15% for minority-owned, 8% for women-owned, 1% for disabled-owned and 3% for veteran-owned.

The goals have been in place for a long time but are not regularly updated, and there has been no ramifications for vendors or contractors that fail to meet those goals.

By amending the code to require a disparity study and utilization plan, plus laying out penalties for contractors that fail to meet goals, the City-County Council aims to eliminate discriminatory outcomes in contracting practices.

Contractors will be required to make a “good faith effort” to reach the city’s contracting goals. That effort will be judged by the Office of Minority-Owned and Women-Owned Business Enterprise, which will consider a variety of actions taken by the contractor to meet the goals, including advertising in minority-focused media for at least 10 days before bids are due; mailings to XBE firms notifying them of contracting opportunities; documented reasons why a XBE firm’s bid was rejected; and documented efforts to provide technical assistance to any XBE firm in obtaining the bonding or insurance required by the city, among others.

If OMWBE’s director determines that a vendor failed to comply with the provisions of the utilization plan, actions could be taken against the contractor.

In committee, some members took issue with the ramifications because they felt the process didn’t give contractors enough opportunities to hear about their shortcoming and try to correct them.

But Camille Blunt, director of the office, said there would be many opportunities for the city to meet with contractors and for contractors to discuss what they’re struggling with in terms of utilizing minority businesses before any action is taken.

The goal is not to impose fines, she said. Rather, it’s to ensure the contracting process is inclusive.

As approved Monday, the ordinance now calls for the office to meet with the contracting agency to discuss correcting deficiencies before a written notice would be issued to a vendor.

Once the notice is issued, the vendor would be required to meet with the Office of Minority-Owned and Women-Owned Business Enterprise.

If the non-compliance isn’t corrected, the office could withhold a portion or all future payments for the project until the vendor is in compliance; place the vendor on the city’s debarred vendor list, which prevents them from bidding on other contracts for a period of time; or terminate the contract agreement.

The ordinance also includes a provision for vendors and contractors to contest the office’s findings. During that period, any penalties would be paused.

Minority Leader Brian Mowery, who also voted against the proposal in committee, said he didn’t understand where the money withheld from contractors would go and had other questions during committee that were never answered, leading to his no vote.

After Mowery voted no, the council’s attorney said the money would stay in the contracting agency’s budget.

The ordinance change had been championed by Mayor Joe Hogsett. The changes came as a direct result of a disparity study conducted during 2019, the first that had been conducted by the city in 25 years, which found that minority- and woman-owned businesses are substantially underutilized in the city’s contracting and procurement processes.

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8 thoughts on “Council imposes penalties on vendors that don’t meet minority-contracting goals

    1. Dominic, it’s not up to the city county council to determine that. It states in city and state documents what constitutes a women owned business, minority, veteran or disadvantaged. 51% or more of ownership has to be of that XBE designation, and actively managed by said status. This is all self reported on the certification forms, backed up by Secretary of State Filings, and verified by site visits by city or state staff.

      Again, read, educate and be informed.

  1. The council should interview the contractors doing work for the city and find out how difficult it is to find DBE’s to bid on these projects, let alone subcontract work to them. Those of us in construction see contractors bending over backwards to attract minority participation without success. It is not the responsibility of the contractors to encourage and assist in setting up minority businesses. And once you find a minority contractor to work with you, you have to assist them financially as they can’t afford to wait the 60 to 90 days it takes to get paid by the city or to sign a contract in which 10% retainage is withheld until after the project is completed. Every prime contractor in this city is begging for good subcontractors and suppliers and minority status never stands in the way of that selection process. I would challenge the city and council to find instances where there has happened. It would be nice for the IBJ to interview some prime contractors to see the struggles they go through to satisfy the minority participation requirements. And don’t start me on how much money the city could save if they did away with all of these minority contracting goals and let the best man win! All they do is drive up the cost of construction without little benefit.

  2. Another example of political correctness and government overreach hurting legitimate business. On first glance, like most liberal ideas, it seems like a good thing and worthy of pursuit. But whenever the government tries to regulate things in the private sector, they usually make matters worse. That has been true over and over again: minimum wage laws, affirmative action, rent controls, forced student busing, the global warming scare, forgiveness of student loan debt, legalization of drugs, etc. The vast majority of problems in our nation’s cities right now are the result of liberal, democratic controlled cities and their onerous habit of overtaxing, and over-regulation of both individuals and businesses that eventually results in many people either becoming wards of the state or in fleeing to other areas with more freedom and less taxation. We are already experiencing this trend from the fall out of the protesting-riots-burning-lawlessness that has taken place under this type of leadership that has turned a blind eye to criminals, law and order, respect for authority, and the rule of law. Why would Indianapolis want to go down that road of failure and ruin?

  3. I love how you all are acting as if this is some liberal thing that was whipped up out of nowhere. The State has had these requirements, and same penalties and ability to withhold payment for noncompliance and not hitting targets since the Daniels administration. If anything, the city is just catching up to what takes place all over the country…and within our own state.

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