The New Orleans City Council’s economic development committee advanced a motion on Tuesday to compel Mayor LaToya Cantrell’s administration to take steps intended to get more city contracts in the hands of minority businesses.
The motion would order the administration to formalize regulations for the city’s equitable business program, which is established in city law and calls for a number of equity goals, including 35 percent of all city spending going to disadvantaged business enterprises, or DBEs.
It would also direct the administration to establish a new mentorship program to connect emerging minority businesses with larger ones that have “graduated” from the program.
The effort is being led by Councilwoman Helena Moreno, and the motion is co-sponsored by all seven City Council members. But several officials from the Cantrell administration showed up to the meeting to defend the administration’s record and oppose certain aspects of the proposed mentorship program.
The disagreements between the council and administration were nuanced, but both agreed on the core issue: the city’s minority business program has not gone far enough to promote and foster minority businesses. And they agreed that more needed to be done to help minority businesses that have grown too big to remain eligible in the city’s program.
“We wholeheartedly agree that we have to push the program further,” said Norman White, the city’s Chief Financial Officer.
The council passed a law more than a year ago instructing the administration to finalize the DBE program regulations. The new motion, if passed by the full council, would set off a 90-day deadline to comply.
One specific issue the administration would have to clarify is how it’s implementing city laws that allow contractors to remain in compliance with certain equity goals even if they fail to achieve them, as long as they show they made a “good faith effort” to reach those goals. Some, including Councilman JP Morrell, are skeptical of the “good faith effort” aspect of the DBE program.
“Best effort is a joke,” Morrell said. “Best effort should never be an option.”
The motion also stipulates that the new regulations need to include the establishment of a “Mentor-Protégé Program” to connect certified DBEs with bigger minority businesses that “graduated” from the DBE program.
The administration would be able to write the program rules, but the motion states that they need to be in “substantial accordance” with a draft version of the program created by J.D. Russell Consulting, the Louisiana Chamber of Commerce Foundation and international consulting firm AECOM.
“Our collective goal is very simple: to build more black businesses,” said Jade Russell, founder of J.D. Russell Consulting, which has played a significant role in creating a DBE program at the city’s publicly funded convention center. “The disparities and the inequities still exist today, despite affirmative action, despite open access, despite DBE programs.”
Under the draft rules, the mentors of the program would be made up of businesses that lost their DBE certification after their annual revenues reached a certain threshold that disqualified them. Those mentors would help smaller businesses in the DBE program with things like technical and legal advice, rent-free use of facilities, partnering on projects and loans.
In return, those larger mentor businesses would receive a waiver that would allow them to temporarily rejoin the city’s DBE program for up to 10 years, which would make them more attractive for city contracts.
Russell said that in many DBE mentorship programs across the country, the mentors are made up of non-minority businesses. She said that there was immense value for DBEs to get guidance from other minority firms that “look like them” and have had to navigate similar societal disadvantages.
She said the mentorship program would also help with another issue in the current DBE program — what happens to firms once they “graduate” the program. Russell, and several council members, argued that these firms shouldn’t be forced out of the program and deserve ongoing support, given the consistent and ongoing disadvantages they’re going to face as minority businesses.
“We have to shift away from graduating businesses out of the DBE program,” Russell said.
But several members of the Cantrell administration showed up at the meeting to push back on the proposal. The director of the city’s Office of Supplier Diversity, Lori Barthelemy, said that while the office supported a mentorship program in general, it didn’t support allowing “graduated” businesses to regain their DBE status. She said it would be unfair to certified DBE businesses, who would be thrown into direct competition with these much larger firms.
Further, Barthelemy said the mentorship proposal would make the city’s DBE rules inconsistent with other DBE programs.
“Our program was developed with criteria that were used by other certification programs. This was done in conjunction with other agencies so that the DBEs that are registered… could be used on available contracts for those other agencies.”
The Lens attempted to interview Barthelemy after the meeting, but was referred to Cantrell’s communications office, which did not respond to questions.
The other problem, White said, is that there simply aren’t enough “graduated” businesses to fuel such a program. He said that since 2018, only three out of 700 registered DBEs had grown so big they no longer qualified for the DBE program.
“I don’t know how many people three DBEs can mentor,” White said.
The Cantrell officials said that they agreed that there is a need for a mentorship program, and that there is a problem with what happens to minority businesses once they grow out of the DBE program. However, they argued that those issues should be handled separately. They suggested a mentorship program that included non-minority firms, and then having more discussions to set up a separate program that could help “graduated” large minority firms.
But council members pushed back, saying that there had been discussions around how to beef up DBE participation for years, and that it was time to take action.
Councilman Eugene Green pointed out that the motion gives the administration some flexibility to alter the proposed mentorship program. And, Moreno said, if the administration had ideas for how to expand the mentorship program to include non-minority businesses, or other ways to help “graduated” minority businesses, that the council could always come back and expand the program or create new initiatives. Moreno added that it was important to establish the program before the city begins to receive hundreds of millions of dollars in federal infrastructure funds.