Calculation of city progress on contracts is questioned

Percentage awarded minority-owned firms does not involve all deals

October 14, 2004|By Doug Donovan | Doug Donovan,SUN STAFF

Mayor Martin O'Malley prides himself on the technological savvy of city government. And for good reason -- his administration's use of statistical tracking has earned national acclaim for improving city services.

But questions were raised this week at a City Council hearing about the numbers O'Malley has used to declare the success of one of his chief priorities: awarding more city contracts to minorities and women.

Troublesome for O'Malley, especially in an election year, was the disclosure in the report of city purchasing figures that the 35 percent goal he set for minority participation is not -- as his executive order states -- a percentage of all contracts awarded by the city's spending board.

Instead, city officials calculate progress toward the 35 percent goal by counting only "eligible" or "qualified" contracts that they determine have a realistic chance of being awarded to one of the more than 1,000 firms the city has identified as minority- or female-owned.

The difference is significant.

In fiscal year 2004, which ended June 30, the Board of Estimates awarded $510 million in contracts. The amount determined to be "eligible" for minority participation was about $317 million. The difference between the two, about $192 million in contracts, was excluded from the minority participation goals because eligible minority firms were not available to do the work or supply the products.

Of the $317 million in contracts where there were minority or female vendors available, 27.1 percent -- or $86 million -- was awarded to those firms. That is the number O'Malley used most frequently to demonstrate that city agencies are approaching his 35 percent goal. (The percentage increases to 32.4 percent when counting $16 million in other contracts that go to minority firms that have declined to be certified with the city and are therefore not counted, statistics show.)

The participation percentage, however, drops to 17 percent when the $86 million is compared with the $510 million total of city contracts. It drops further, to 12 percent, when $200 million in excluded contracts is added. The city says it does not count that amount because the money represents contracts awarded to health care providers, where there are no minority- or female-owned firms, and includes grant money for health department programs.

O'Malley said he has always made it clear that the 35 percent goal was measured by "eligible" or "qualified" contracts. The mayor said confusion over which contracts were being included was not widespread.

"If I have ever made that unclear by not properly using the modifying clause -- `eligible contracts' -- I apologize sincerely for that," O'Malley said. "But there has never been any confusion in my mind about it or in the minds of minority business advocacy groups."

`Quite shocking'

Not so, said Wayne Frazier, president of the Maryland-Washington Minority Contractors Association and one of the people the mayor identified as having a clear understanding about the participation statistics.

"This is the first I've heard of the word qualifying," Frazier said. "It's quite shocking, quite surprising and most definitely disappointing."

Frazier praised the mayor for his efforts at improving the total dollar amounts, from about $45 million in calendar year 2000 to the $86 million awarded last fiscal year.

Early commitment

O'Malley committed to such a policy as soon as he took office. His executive order of Sept. 14, 2000, calls on city agencies to "award 35 percent of all city contracting dollars" to minority- and female-owned firms.

O'Malley said that he has made it clear on several occasions that he has qualified the percentage goal.

"I would suggest that you go back and look at the state-of-the-city addresses," he said.

In his last two state-of-the-city addresses, O'Malley did use the words qualifying and eligible when discussing contract goals.

In February's speech, he said, "28 percent of qualifying city contracts goes to minority owned businesses -- almost at our 30 percent goal."

And in February of last year, he said, "We are quickly approaching our 30 percent minority participation goal for eligible Board of Estimates awards -- we're now at 26 percent."

But in his 2002 address, he stated, "Now, our challenge is to hit our goals -- including 35 percent of all city contracts." His 2001 address states: "And city government made it our stated goal to award 35 percent of the city's business -- all business, not just subcontracts -- to minority-owned firms."

On April 14 of last year, the mayor proclaimed "minority and women's business enterprise week in Baltimore." The press release states: "In [fiscal year 2000], nearly $45 million was awarded through the [Board of Estimates]. This represents 14 percent of all BOE awards granted by the city. In [fiscal year] '01 and '02, awards steadily grew from $67.2 million to $78.5 million, representing 23 percent and 26 percent of all Board of Estimates awards respectively."

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