§ 2-9B-1. FINDINGS.

The city council hereby adopts the following findings:

(A)

The City of Austin regularly enters into contracts for the procurement of goods and services of many kinds, including for professional services. Through its procurement activities, the City has a substantial impact upon the economy of the Austin area.

(B)

In 1987, the Economic Development Commission of the City was directed by the city council to review the City's policies and experiences relating to contracting opportunities for minority- and women-owned business enterprises with the City and to suggest revised policies and procedures, if determined necessary.

(C)

The Economic Development Commission, through its Small Business and Minority Entrepreneurship Committee, held meetings with representatives of various City departments as well as with interested individuals and organizations, conducted a public hearing and took statements from numerous members of the public.

(D)

The Commission found significant disparities between the number of MBEs and WBEs and City contracts awarded to, or subcontracted to, MBEs and WBEs.

(E)

The city council found that these disparities resulted from discriminatory practices, thereby impairing the competitive position of MBEs and WBEs with the City.

(F)

As a result of the work of the Economic Development Commission in 1987, the city council passed an affirmative action program to address the City's role in perpetuating the disparities found in the pattern of contract and subcontract awards to MBEs and WBEs.

(G)

In 1989, the U.S. Supreme Court, in the case styled City of Richmond v. J.A. Croson Co., held that a local government may redress race discrimination in its contracting activities if it can demonstrate through relevant evidence a compelling governmental interest sought to be remedied, and that the remedies adopted are narrowly tailored to promote that interest.

(H)

In response to Croson, in 1992 the city council engaged a consultant to study the City's history and contracting practices, the availability of MBEs and WBEs in the City's marketplace, and any disparities in the City's utilization of such businesses. The study was completed in September 1993, and revealed a history in the Austin area of de jure and continuing de facto racial and gender discrimination in the City's marketplace. Further, disparities were found between ready, willing and able MBEs and WBEs and the value of contracts they received from the City.

(I)

After receipt of the study, the City conducted a series of public hearings at which additional statistical and other evidence of discriminatory practices and acts against MBEs and WBEs was presented.

(J)

The city council appointed a community-based Disparity Study Ordinance Committee to review the studies and the law, and to draft programmatic changes to the current ordinance. The committee met over several months and recommended certain changes to the current ordinance.

(K)

Based on the evidence provided, the city council determined that:

(1)

Prior to the adoption of the City's 1987 ordinance, there were disparities between the number of qualified MBEs and WBEs ready, willing and able to perform services on City contracts and the number of such businesses actually engaged by the City or the City's prime contractors.

(2)

Despite the implementation of the 1987 ordinance, disparities in the utilization of MBEs and WBEs on City contracts continued to exist.

(3)

Although the City has undertaken since 1990 a variety of innovative race- and gender-neutral technical assistance, insurance and bonding programs, race- and gender-neutral programs alone have not been sufficient to remedy the effects of discrimination.

(4)

The evidence continues to demonstrate that MBEs and WBEs have been underutilized in contracting opportunities on City contracts as a result of private sector discrimination.

(5)

The existence of an exclusionary network in public contracting and other systemic barriers has excluded otherwise qualified MBEs and WBEs from receipt of contracts.

(6)

Although the City has made substantial progress in eliminating discrimination in its own contracting practices, discrimination exists in private companies that contract on public projects. As a result of this discrimination, the City has been in the past a passive participant in a system of discrimination and, in the absence of programs to eliminate disparity in utilization, would continue to be a passive participant in such a system.

(L)

The City engaged a consultant to conduct an updated study of availability of minority- and women-owned firms within the Austin area. The 2003 study indicates that there continue to be minority- and women-owned firms available to perform the work of City contracts and subcontracts.

(M)

In 2003, the City examined various availability and disparity studies conducted for Texas governments. These studies indicate that minority- and women-owned businesses suffer discrimination in access to opportunities in the State of Texas.

(N)

In 2005, the City engaged a consultant to conduct a further updated study to assess the continued need for this program and whether the program can be more narrowly tailored to meet such need.

(O)

Based on the evidence from the 2005 study, the City determined that:

(1)

Despite the City's efforts to create equal opportunities in its marketplace, the evidence indicates that, absent the programs authorized under this ordinance, MBEs and WBEs would be underutilized on City contracts relative to their availability.

(2)

As set forth in the 2005 study, race- and gender-neutral approaches alone are inadequate to remedy the lingering effects of past discrimination in the City's marketplace.

(3)

The 2005 study found that the ordinance is narrowly tailored to address the identified current effects of past discrimination and private sector discrimination in the City's marketplace. The study also found that the ordinance reduces the possibility that the City will be a passive participant in discrimination.

(4)

All of the persons targeted by the ordinance have been affected by disparities in the City marketplace.

(5)

The ordinance does not unduly burden third parties not eligible for certification under the program.

(6)

The sunset date contained in the ordinance ensures that the city council will regularly review the program to verify its necessity and that it remains tailored to the specific conditions found in the City's marketplace.

(P)

In 2006, the City updated the ordinance to repeal City Code Chapter 2-9 and replace it with four distinct chapters addressing separate aspects of the program: Ordinance 20060608-058 adding Chapter 2-9A. Minority-Owned and Women-Owned Business Enterprise Procurement Program: Construction; Ordinance 20060608-059 adding Chapter 2-9B. Minority-Owned and Women-Owned Business Enterprise Procurement Program: Professional Services; Ordinance 20060608-060 adding Chapter 2-9C. Minority-Owned and Women-Owned Business Enterprise Procurement Program: Nonprofessional Services; and Ordinance 20060608-061 adding Chapter 2-9D. Minority-Owned and Women-Owned Business Enterprise Procurement Program: Commodities.

(Q)

As the City updated the ordinance, the City commissioned Colette Holt & Associates in late 2005 and NERA Economic Consulting in late 2006 to conduct an updated availability analysis and other statistical and anecdotal investigations regarding the presence of disparities in the City's marketplace. The results of these efforts are consolidated in the May 2008 report entitled "Race, Sex, and Business Enterprise: Evidence from the City of Austin".

(R)

Based on the evidence from the 2008 study, the City determined that:

(1)

There are identifiable adverse and statistically significant disparities in business formation and business owner earnings for all M/WBE types in the City's marketplace.

(2)

There are identifiable adverse and statistically significant disparities in access to capital for all M/WBE types in the City's marketplace.

(3)

Despite the City's efforts to create equal opportunities in its marketplace, the evidence continues to indicate that, absent the programs authorized under this ordinance, MBEs and WBEs would be underutilized on City contracts relative to their availability.

(4)

Austin's program continues to be narrowly tailored.

(S)

Texas law applicable to the City authorizes race- and gender-conscious contracting goals, and if utilized, requires that goals be based on constitutional standards related to the City's marketplace.

(T)

Under these circumstances and based on the factual predicate which has been established after careful study and review, the City still has a compelling governmental interest in remedying the racial and gender discrimination that exists in the market segments in which the City does business, and in ensuring that the City is not a participant in such discrimination, thereby allowing all segments of the Austin community to share in the economic benefits of the City.

(U)

The program adopted herein is narrowly tailored to remedy that discrimination.

(V)

In 2013, the City commissioned a disparity study from National Economic Research Associates, Inc. ("NERA") to develop evidence relevant to the City's continuing compelling interest in remedying discrimination. The results of these efforts were presented in the December 2015 report entitled "Race, Sex, and Business Enterprise: Evidence from the City of Austin".

(W)

Based on the evidence from the 2015 Report, the City determined that:

(1)

Minorities and women are substantially and significantly less likely to own their own businesses as the result of discrimination than would be expected based upon their observable characteristics, including age, education, geographic location and industry.

(2)

Minorities and women earn substantially and significantly less than their nonminority male counterparts.

(3)

There are large, adverse, and statistically significant disparities between MBE/WBEs share of overall revenues and their share of overall firms in the U.S. as a whole, and in the State of Texas.

(4)

There is evidence of discrimination against MBE/WBEs in the City of Austin market area for the small business credit market.

(5)

Anecdotal evidence from outreach meetings, mail surveys and in-depth personal interviews of MBE/WBE firms and non-MBE/WBE firms revealed numerous forms of discrimination affecting the City's marketplace, including unequal access to bonding, stereotypical attitudes, passive participation in private sector discrimination, predatory business practices, and closed business systems, causing minorities and women continue to suffer discriminatory barriers to full and fair access to City of Austin, other public sector and private sector contracts.

(6)

Despite the City's efforts to create equal opportunities in its marketplace, the evidence continues to indicate that ongoing effects of marketplace discrimination continue to undermine the utilization of MBE/WBE firms.

(X)

The City is authorized to establish race- and gender-conscious contracting goals, and if utilized, required that goals be based on constitutional standards related to the City's marketplace.

(Y)

Under these circumstances and based on the factual predicate which has been established after careful study and review, the City still has a compelling governmental interest in remedying the racial and gender discrimination that exists in the market segments in which the City does business, and in ensuring that the City is not a participant in such discrimination, thereby allowing all segments of the Austin community to share in the economic benefits of the City.

(Z)

The MBE/WBE Program adopted by the City is narrowly tailored to remedy the discrimination described above and in City Code, and should be continued.

Source: Ord. 20060608-059; Ord. 20081211-061; Ord. No. 20181213-040 , Pt. 3, 12-24-18.