The State of Minority- and Women- Owned ... - Cleveland.com

Executive Summary
A. Introduction
Executive Summary
To ensure compliance with constitutional mandates and M/WBE best practices, NERA
Economic Consulting was commissioned to examine the past and current status of minorityowned
business enterprises (“MBEs”) and women-owned business enterprises (“WBEs”)
(collectively “M/WBEs”) in the geographic and product markets for City of Cleveland
contracting and procurement. The Study finds both statistical and anecdotal evidence of business
discrimination against M/WBEs in the City’s relevant market area.
The results of NERA’s Study provide the evidentiary record necessary for the City’s
consideration of whether to implement renewed Minority Business Enterprise (“MBE”), Female
Business Enterprise (“FBE”), and Cleveland Area Small Business (“CSB”) policies that comply
with the requirements of the courts and to assess the extent to which previous efforts have
assisted M/WBEs and CSBs to participate on a fair basis in the City’s contracting and
procurement activities. The Study will also assist the City to narrowly tailor existing race- and
gender-based measures and any new measures that may be considered. 1
B. Legal Standards for Local Government Race- and Gender-Based
Affirmative Action Contracting Programs
To be effective, enforceable, and legally defensible, a race- and gender-based program must meet
the judicial test of constitutional “strict scrutiny.” Strict scrutiny requires a “compelling interest”
in remedying discrimination, which has been defined as a “strong basis in evidence” of the
persistence of discrimination, and any remedies adopted must be “narrowly tailored” to address
that discrimination. Applying these terms to government affirmative action contracting programs
is complex, and cases are quite fact specific. Since 1989, federal appellate and district courts
have developed parameters for establishing a state or local government’s compelling interest in
remedying discrimination and evaluating whether the remedies adopted to address that
discrimination are narrowly tailored. This Study follows the guidelines promulgated by the
National Academy of Sciences, which the NERA team was proud to develop. 2
Chapter II of the Study provides a detailed and up-to-date overview of current constitutional
standards and case law and outlines the legal and program development issues the City must
consider in evaluating its CSB/MBE/FBE Program and any future initiatives, with emphasis on
critical issues and evidentiary concerns.
1 At the City of Cleveland, the acronym “FBE” includes women-owned business enterprises regardless of race.
The more common “WBE” usage includes only nonminority women-owned business enterprises. Both terms
appear in this report. The term “FBE” is used primarily referring to program related aspects of the City’s
CSB/MBE/FBE Program. In most of the statistical tables and discussion, however, the term “WBE” is used in
order to avoid double counting and for consistency with USDOT DBE Program guidelines.
2 Wainwright, J. and C. Holt (2010), Guidelines for Conducting a Disparity and Availability Study for the Federal
DBE Program, Transportation Research Board of the National Academies, NCHRP Report, Issue No. 644.
NERA Economic Consulting 1