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The city of Portland has launched a pilot program to create more equitable contracting opportunities for minority-owned and woman-owned firms.

However, many community partners involved in the program’s creation are skeptical that it will be effective.

Under the 24-month pilot policy, the city will accept alternative certifications in addition to the one offered by Oregon’s Certification Office for Business Inclusion and Diversity (COBID) that is required to participate in many contracting programs with equity requirements. The idea, Portland Chief Procurement Officer Biko Taylor said, is to remove a barrier that had existed for some firms.

鈥淲e think an inclusive contracting pilot will allow us to cast a broader net and attract other businesses that may not have done business with us before through pilot partner organizations,鈥� Taylor said.

However, the alternative certifications each have different requirements and allow firms with vastly different economic backgrounds and resources to compete for the same contracts.

鈥淭he city is not putting together a fair process,鈥� said Faye Burch, president of FM Burch & Associates. 鈥淚t’s just opening up the market.鈥�

Last year, the city of Portland distributed $798 million to businesses and contractors; $113.4 million of that went to construction projects, according to the city, and 29 percent went to certified minority-owned and woman-owned firms. The remainder was spent on goods such as traffic signs and computers, and professional services.

Currently, the city accepts only COBID certification for contracts. But outside of construction, Taylor said, officials found the COBID-certified pool of minority-owned and woman-owned businesses able to provide those other goods and services to be relatively small.

Firms seeking COBID certification as a woman-owned or minority-owned business or a disadvantaged business enterprise (DBE) must show that at least one woman or minority owns at least 51 percent and manages the daily operations. Also, the business’ annual gross earnings must not exceed $23.98 million.

The pilot program will allow bidding for city contracts by firms with certifications from three other agencies 鈥� the National Minority Supplier Development Council (NMSDC), Women’s Business Enterprise National Council (WBENC), and Washington State Office of Minority and Women’s Business Enterprises (OMWBE).

Neither the NMSDC nor the WBENC has an earnings ceiling. However, they do require the 51 percent minimum ownership percentage and management of daily operations. The OMWBE is similar but has an annual gross earnings ceiling of $28.48 million.

Under the pilot program, COBID-certified firms will potentially be competing with much larger businesses for contracts.

Portland’s Procurement Services office intends to self-govern that and 鈥渕aintain the integrity of those guide rails (COBID), especially in construction,鈥� Taylor said. 鈥淭his is not a program that is intended to increase business for any businesses that are over $24 (million), $25 million.鈥�

The pilot program follows a previously problematic set of initiatives that aimed to create more contracting opportunities for minority-owned and woman-owned firms. The initiatives included aspirational goals for prime contractors to hire COBID-certified subcontractors as well as alternatives to the low-bid contract award method. The policies also sought to support workforce diversity through grants and programs like the Prime Contractor Development Program (PCDP), which aimed to limit competition on prime construction contracts.

The initiatives were later found by a city audit in 2020 to be mismanaged, flawed in design, and open to gamesmanship.

Contractors were found cheating the system. In some cases, a certified woman-owned firm was observed by city staff without its owners ever present, or with a man. In others, white-owned contractors created smaller companies, registered them as 鈥渆merging small businesses,鈥� and then subcontracted to themselves.

Most of the PCDP prime construction contracts were awarded to white-owned firms, and little to none of the grant money made its way to minority-owned and woman-owned firms.

Maurice Rahming, president of O’Neill Construction Group, said it’s 鈥渃ritical鈥� that the city start with a pilot program because there is a lot of potential for fraud with certifications. Now, stakeholders will be able to see where the program can succeed and where there is room for improvement.

Along with the alternative certifications allowed, the city will accept bids from self-identified local minority and woman-owned firms. COBID’s ownership requirements will apply, but there will be no economic ceiling.

Burch called self-certification 鈥渆gregious鈥� and 鈥渞eprehensible.鈥�

鈥淚 think the whole experiment the city is trying eliminates the opportunity for the smaller business and changes the game to only those bigger companies can compete,鈥� she said. 鈥淭he only opportunities that these firms are getting now is those carved out by public-sector requirements.鈥�

The Procurement Services office does not anticipate many 鈥渟elf-identified鈥� firms to bid on contracts, Taylor said. The number will likely be in the hundreds and not the thousands, he added.

Full-time city staff has been designated to vet the self-identified firms, Taylor said. During the initial phase, the office will assess the number of likely self-identified firms and allocate more staff to vetting and canvassing if needed.

Kenechi Onyeagusi, executive director of Professional Business Development Group, said she hopes the pilot program does what it is intended to do: support local minority-owned and DBE firms.

Meanwhile, the Portland City Council last week signed the Regional Workforce Equity Agreement and announced the city will launch its first disparity study in over a decade.

Also, Taylor said the city intends to revamp the PCDP in partnership with the National Association of Minority Contractors‘ Oregon chapter and community organizations.

鈥淚 know there’s been talk about sunsetting it, but it is a program that I believe in,鈥� he said. 鈥淲e thought that the framework of it is positive. The results for it were clearly not, but we feel like that is a framework that we can leverage and improve upon.鈥�

The plan is to refer to the 2020 audit and rely on guidance given in the City Council work session in February 2021.