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The Real Numbers At The MDC Are A Sham

By Rufus Wells and Clarke King

September 21, 2011

In our last article “What The MDC Does Not Want You To Know” (Northend Agent’s 6/1/2011), we criticized the MDC for not revealing statistics on contracting with Minority Business Enterprises, specifically African American owned businesses involved in the construction industry. The reason we singled out African American construction companies is because in the Disparity Study on the MDC completed in July 2008 by Miller Three, a Disparity Consulting firm located in Atlanta Georgia, found that the MDC discriminated against African American owned firms engaged in the construction industry.

The discrimination problem could have easily been corrected in 2008 if the MDC had established a Set-Aside program for African American construction companies. Instead of fixing the problem, the MDC decided to ignore the discrimination issue because the MDC believed it would give them a “Black Eye” to admit the agency engaged in discriminatory practices. The solution to the discrimination problem was the establishment of a Small Local Business Enterprise Program (SLBE). The SLBE program is a race and gender “neutral” program designed to increase the amount of work being contracted to businesses located the eight member MDC towns of Hartford, East Hartford, West Hartford, Newington, Rocky Hill, Bloomfield, Windsor and Wethersfield. While we support the idea of keeping the $2 billion Clean Water Project funds local, we also believe that a fair share of the funds should go to African American owned construction firms since a majority of the work is in Hartford, and Greater Hartford has African American and Hispanic contractors who could grow their companies working on this project.

The MDC recently published an article in the Northend Agent’s (7/6/2011) entitled “The Real Numbers on MDC Minority Contracting” in response to our 6/1/2011 article. The article attempted to justify the reason the MDC received an award from an organization for its innovative approach to hiring MBE firms. The statistics provided in the article listed an African American technology firm that received $814,698; two African American law firms received $739,757 and $332,019 respectively. The largest contract issued to an African American construction firm was $320,917. All of the contracts were related to 2010 activity. The article went on to state that total minority spending of $13,144,383 represented almost nine percent (9%) of all spending.

At this point we have to become a bit creative to determine if African American construction firms were discriminated against during the year 2010. If the MDC spent $13,144,383 during 2010 and this number is nine percent (9%) of the total spend, then by dividing I get the total spend for 2010 of $146,048,700 – plus or minus a million dollars. If we look at just the African American construction companies listed by the MDC, it totals $454,733 in 2010. What happened to the $13 million the MDC put in your face. African American construction contracting represents 0.31% or less than one percent (1%) of the total 2010 spending by the MDC. Do you get it, the $13 million was a pump fake, the real number for African American construction firms is $454,733 or 0.31%. Keep that number in your head when you look at all the construction work that is going on around the City of Hartford and in the suburbs.

Now, let us turn our attention to the so-called Match Maker Program that is not really a program established by the MDC. Under this program a minority firm is supposed to be matched up with a major firm who is supposed to show the minority firm good business practices, with a goal of making the minority business stronger. This program sometimes comes in the form of Joint Ventures in the City of Hartford where the minority firm has to have at least a 40% ownership in the venture. This means that 40% of the venture’s profit goes to the MBE firm, or 40% of the loss in the event the venture does not make money. When the majority firm makes money and the minority firm losses money, this is not a Match Maker Program, it is a passthrough. Under this situation the contract is awarded to the majority company, who is then supposed to subcontract work to the minority company. The problem arises if the MBE firm does not receive 40% of the work, or if the majority firm has the ability to fire the MBE firm without cause.

This is plantation economics 101 and is also known as “share-cropping”. In sharecropping “Mastah” (the Master of the plantation) provides the land, and his sharecropper partner provides the labor. Mastah is independent and owns the plantation while his “share-cropping partner” can never be independent nor free. I have seen this played out in the construction industry time and again and it never works out for the minority unless there is aggressive, independent monitoring and oversight of Mastah.

Let us apply the share-cropping example to the trucking companies listed as “subcontractors” in the MDC’s article. Mastah is the majority firm that receives the Prime contract from the MDC. A Prime contractor is a contractor that receives his money (check) directly from the MDC. The share-cropper is the MBE trucking firm hired by Mastah to provide trucking services on MDC projects. Under one example, Mastah might not have any trucks, but is used as a pass-through to hire MBE truckers that have one or several trucks. Under another example, Mastah has his own trucks, but hires out a portion of his work to MBE truckers. Let’s put some dollars to our example so that you understand the plantation mentality involved in trucking. Mastah receives $100 per hour to drive his trucks. If Mastah uses MBE firms he pays them $65 per hour to roll their trucks. If the cost to roll a truck is $80 per hour, Mastah makes a profit of 20 per hour on his trucks. If Mastah uses a MBE trucker who gets $65 per hour, Mastah makes a profit of $35 per hour. In the meantime, the MBE trucker loses $15 per hour every time he rolls his truck for the MDC and Mastah.

One thing is clear; the MDC wants a pat on the back for driving Minority truckers out of business. The reason we can say this with certainty is because “you can sheer a sheep many times, but you can only skin him once”. If there are currently 30 MBE trucking firms, next year there will only be 15 trucking firms because the others will have been skinned and out of business.

I contacted several of the African American trucking firms listed in the MDC’s article as having received $5,740,000 contracts in 2010 because if true, this would mean that the MDC is finally doing something right in hiring minority contractors. So I began to check out the “facts” as reported by the MDC to determine if in fact the MDC was a Player or a Pretender. I called the first company and asked them if they had a contract with the MDC in 2010 worth over $1 million dollars. The response came back - No! I called the second company and asked if they received a contract or performed work, or had been paid $250,000 as reported by the MDC in the Match Maker Program. The answer came back - No, they had only done $5,000 worth of work in 2010 for the MDC. That’s a $245,000 difference between what was reported and what was received or performed. Time after time the numbers were found to be an outright lie, not just a misrepresentation of the facts. There was over a million dollar difference in what was reported on the million dollar-plus contract.

I have come to the conclusion that the MDC is not only a Pretender, but they have a habit of being disingenuous (lying) to the minority community. So the minority truckers can never make a profit by working for the MDC and those truckers that do work for the MDC will soon be out of business. This same fate is the reason sharecropping died in the South. At least on the plantation Mastah gave the share-cropper some land to work and then went about his duty of skimming all the profits from his unknowing share-cropper partner. Here is a major point that was uncovered in the Disparity Study. The minority community does not trust the MDC to do the right thing by minority contractors, and I would extend this to include minority employment. The culture of the MDC is anti-minority. What is an organization’s culture?

To make it real, let’s look at the culture of our neighborhood for a minute. If you see something illegal going down in the neighborhood, you don’t snitch. I’m not saying this is good or bad, it’s just part of the culture. We all know what happens to people who see too much in the community. Let’s now apply the idea of culture to contracting at the MDC. The MDC has a history of not contracting with African American owned firms. If I break from history and decide to hire a minority firm, I have violated the culture of the organization and the organization will deal with me the same way the neighborhood deals with a snitch. Until the culture of the organization is changed, the MDC cannot change. During the 1960’s and 70’s this cultural concept was known as institutional racism. In other words, racism is built into the system. The design of the system continues to lock minorities out, while rewarding white majority contractors – even on work in our neighborhood.

There is something wrong with this picture and the community cannot count on the MDC to police themselves, or to change the culture of the MDC on its own. The MDC needs independent oversight by an outside party. When the MDC hired Miller Three Consulting out of Atlanta, Georgia I thought there was hope for change at the MDC. That hope was quickly dashed when Miller was not allowed to complete their assignment. I did not know this at the time, but a principal in Miller Three was instrumental in formulating the minority business strategy for Mayor Maynard Jackson of Atlanta on the Hartsfield International Airport project. Hartsfield has been deemed as the “national model” for minority business engagement. The MDC had a Superstar in its midst and kept him on the bench, then told him to shower before the game was over and sent him home. Sending Miller Three home left the MDC team one man short. Instead of looking for another superstar, the MDC looked into the bleachers and found an attorney. We all know that attorneys can do anything, play any position, and most importantly get you out of a jam. Don’t get my words twisted, I love attorneys, my daughter is an attorney, but if I needed someone to take the last shot in a basketball game, your can be assured it would not be an attorney. I would be looking for Michael Jordan, or Ray Allen, someone who had a history of delivering the goods under pressure. The MDC found nine attorneys in the stands and paid them more than twice what it would have cost them for the Michael Jordan of minority business consulting. Instead of delivering a solution to the discrimination problem at the MDC, these attorneys were paid to dance around the issue and come up with something that looked like a ame winning shot. This is a slap in the face of the minority community, akin to getting your finger cut off and the MDC hiring a plumber instead of a surgeon to put it back together.

The MDC needs to bring back Miller Three and give them the responsibility and authority to complete the job they started. This is the only way the playing field can be leveled for minority contractors. The bad information provided by the MDC is more of the same “stuff”, and proves that the MDC is incapable of fixing the institutional racism itself. This is the opinion of two men, what’s yours?