Ensuring Equity in Contracting and Procurement

BY LOUISVILLE AND JEFFERSON COUNTY METROPOLITAN SEWER DISTRICT | LOUISVILLE, KY

In March 2020, as employers in Louisville, Kentucky and across the United States were having workers stay at home in attempts to curb the spread of COVID-19, the police shooting death in Louisville of 26-year-old Black medical worker Breonna Taylor during a raid on her apartment prompted hundreds of people to take to the streets in protest. Months of daily demonstrations also focused attention on the history of economic injustice faced by minorities in Kentucky’s largest city.

The city’s then-mayor, Greg Fischer, decided to confront the economic issue head-on. To do so, Fischer recruited leaders of the local utility sector, most prominently the heads of the Louisville and Jefferson County Metropolitan Sewer District, Louisville Gas and Electric Company (LG&E) and Kentucky Utilities Company.

Fischer created an Equity in Contracting and Procurement Task Force. He noted that while Black residents accounted for 22 percent of the city’s population, they owned only 2.4 percent of businesses. He also cited a Brookings Institution statement that “At $171,000, the net worth of a typical white family is nearly 10 times greater than that of a Black family ($17,150) in 2016. We must address the unconscionable wealth gap that exists between Black and white America,” the mayor said.

At the time there was a projection of more than $5 billion in public and private infrastructure investment over the next five years. The plan was to provide an equitable share of the contracting for those projects to businesses owned by minorities, females, disabled, and LGBTQ persons. “It’s critical that we support minority, female, and disabledowned business enterprises and ensure they have access to contracting opportunities that can give them the chance to grow and build community wealth in a more equitable way,” Fischer said.

Metropolitan Sewer District Executive Director Tony Parrott and then LG&E Chief Executive Officer Paul Thompson were tapped to co-chair the task force. The September 9, 2020, task force announcement noted that “both MSD and LG&E have a significant history of promoting supplier diversity through their own procurement policies.”

Also on the task force roster are the local water company, airport authority, city housing authority, public school district, transit authority, and the University of Louisville, along with the city council and executive agencies and community partners ranging from the Urban League to the Greater Louisville Inc. Chamber of Commerce.

Three months before the task force was formed, MSD updated its three-decade-old Supplier Diversity Program with higher minority contracting targets along with a Community Benefits Program aimed at having contractors provide opportunities in workforce development, skilled trades training, small business outreach, and mentorship.

In 2021, collaborating Task Force participants spent over $700 million in capital expenditures with 12.1% of that being spent with local diverse businesses, including 3.9% spent with Black-owned businesses. Through the second quarter of 2022 Task Force participants spent close to $260 million in capital expenditures, with 13.2% of that being spent with local diverse businesses, including 4.0% spent with local Black-owned businesses.

The Task Force also identified discriminatory barriers to the expansion of doing work with diverse businesses, and specifically, Blackowned businesses. Subcommittees brainstormed recommendations to reduce and/or eliminate these barriers. The Task Force also contracted with a national consultant to provide analysis, review and recommendations for policies and programs that will increase the utilization of diverse businesses.

There are subcommittees focused on data collection and reporting, community benefits, workforce development and local labor expansion, local diverse business utilization, and outreach.

The Task Force was asked to accomplish the following:

1. Establish goals/timetables directed toward increasing expenditures with, and the utilization of, Black and diverse-owned businesses. The results from these efforts are to be included in quarterly reports on the utilization and effectiveness of policies and practices.

2. Develop Local Labor Utilization Guidelines to increase the number of local jobs and employment of local labor in the Louisville Metropolitan Statistical Area (MSA).

3. Develop a Community Benefits Guideline to invest in local non-profits engaged in missions to increase Black-owned and Minority-, Female-, and Disabled-owned Business Enterprises (MFDBE) capacity and workforce development in the Louisville MSA.

4. Solicit input from and collaborate with local businesses.

Progress has been made to improve economic inclusion in the community, and there is still more to accomplish. A long history of commitment to supplier diversity at Louisville MSD positioned the public utility to help lead the continuing effort.

Louisville and Jefferson County Metropolitan Sewer District is located in Louisville, Kentucky and received a National Environmental Achievement Award for its efforts on equity in contracting and procurement.