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County settles lawsuit charging favoritism of minority-owned firms

Shelby County will be seeking a new approach to awarding contracts after the Shelby County Board of Commissioners voted to settle a discrimination lawsuit accusing the county of favoring minority over white-owned businesses to cap off its Monday meeting.

Filed in 2019 by the Mechanical Contractors Association of Memphis, White Plumbing & Mechanical Contractors and MCAM will receive $331,950. The white-owned company claimed it lost out on a subcontracting job to a minority-owned competitor despite offering the most competitive bid. A suspension of the current minority and women-owned businesses program is expected. 

Commissioner Van Turner Jr.

“We had issues with our expert witness, so we thought that the best option this time was to move towards a settlement,” said Commissioner Van Turner Jr., District-12, who sponsored the item.

A tacit admission of a weak case, the resolution was added to the agenda as the final order of business. Unanimously approved, it was also recommended by the county attorney and Shelby County Mayor’s Office.

The saga of minority contracting in Shelby County has many chapters that date back decades. In 1990, a federal judge ruled Shelby County’s small business purchasing program race-based and ultimately illegal – with a caveat: a loophole allowed money to be set aside to address past racial injustices. The MWEB program was born. In subsequent years, a pattern of studies and course corrections has emerged. For example, the 2016 study was preceded by a 2014 study.

“I am very positive about where we are. Yes, we had to resolve the lawsuit. It was perhaps the best thing to do based on issues as stated with the last study. We no longer have those issues to deal with,” said Turner.

However, the county’s MWBE program is once again under the microscope. This round of scrutiny and adjustment is scheduled to be completed by June 30. A new iteration will likely follow. 

The new study will be performed by Atlanta-based law firm Griffin & Strong. 

“Attorney Strong is a native of Memphis. He is the expert for the city of Memphis. We think he has comparables. He is from this area of town and he has been in this space for 20 years. We think that the study by Griffin & Strong will be much more reliable than what we received to build the program on that we just resolved,”

In the meantime, the program will operate as a disadvantaged business enterprise. A DBE is a small business where socially and economically disadvantaged people have at least 51% stake in the enterprise. They also manage the business and control its day-to-day operations.

“The DBE program handles disadvantaged businesses as opposed to women-owned and minority businesses. However, most of the disadvantaged businesses tend to be minority or women-owned businesses,” said Turner.

Most federal contracts have a DBE program.  Likewise, the Memphis Airport Authority. 

“They are very successful with diverse participation. Based on our research in looking into how the airport authority uses the program we felt we could work it into our local county government with success. This will be a transition program that will allow us to still business with diverse companies throughout the county while we get the new study done and get the new MWEB program back online,” said Turner, who opined that in the future the county may employ both  MWEB and DBE programs.

The county’s purchasing department will continue to use the LOSB program to ensure diversity. The Locally Owned Small Business program requires contracts go to area small businesses, many of which are owned and operated by minorities or women. As a further backstop, the county also adheres to the Equal Opportunity Commission program, which requires a business to hire a diverse workforce in order to receive a county contract. 

“In other words, if you are company A, and company A has been around for ten years and has no women and no African American, no person of any diverse and cultural difference than just white American, then you can’t even get an EOC number with the county to apply to do work with us until you diversify,” said Turner.

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