In anticipation of the COVID-19 pandemic’s long-term impact, leaders of two Portland-based minority contracting organizations are pressing state and local officials to update rules for public projects in order to help keep their members in business through a looming economic downturn.

In to Oregon Gov. Kate Brown and other elected officials and public agency stakeholders, representatives of the National Association of Minority Contractors‘ Oregon chapter and the Metropolitan Contractor Improvement Partnership (MCIP) warned that minority contractors are the worst hurt in economic downturns. The 2008 recession, the letter states, put a large number of minority contractors out of business because they lacked access to working capital, and prime contractors reduced the amount of work they subcontracted out.

“We don’t want the recovery this time around to be as slow for our industry, so we’re trying to make sure we amplify our very targeted, intentional concerns that our businesses were left behind 12 years ago, and we don’t want to see that happen again,” said Nate McCoy, executive director of NAMC-Oregon.

Maintaining cash flow and payroll are crucial in the short term, as is the ability to apply for Small Business Administration loans and grants, so among the requests are that the state provide immediate technical assistance funding to help minority contractors apply for aid related to COVID-19.

“That only straps you down for the next 30, maybe 60 days, though,” McCoy said. “So the big question is how we stabilize long term.”

The answer, he said, is lifting some of the regulatory requirements and easing the financial burdens of work on public projects, as well as steering procurement toward minority firms.

The groups propose raising the state limits for direct award of contracts to certified businesses from $10,000 to $250,000, increasing the state limit to competition for a contract from $50,000 to $300,000 for certified businesses, lowering or providing financial backing for bonding requirements, and requiring payment of invoices within 30 days.

Because bigger general contractors during lean times self-perform more work and compete for smaller contracts, the groups are asking for a requirement that general contractors on all public projects bid out all scopes of work and limit self-performed work to 10 percent.

The goal, according to McCoy, is not to create a sheltered market, but one of support to keep opportunities within reach of small businesses that can compete among themselves for contracts.

Another request being made is for an immediate moratorium on state-regulated apprentice ratios. While stressing the importance of apprenticeship and pre-apprenticeship training on-site, McCoy said members are questioning the practicality of on-site training during a health crisis.

“Right now, is that ultimately a safe thing to have people learning on the job during a crisis?” he said. “Some of our members don’t think that’s a fair proposition when key employees are leaving. So who’s going to be working with these apprenticeship program participants?”

Also, failure to adhere to apprenticeship requirements can result in liquidated damages, creating another barrier for small contractors that need barriers lowered, McCoy said.

In addition to easing regulations, the letter’s signers – McCoy, NAMC-Oregon board chairman Andrew Colas, MCIP board chairman Erik Esparza and MCIP interim executive director John Jackley – are pushing for a change to a common parlance for minority contractors.

Firms certified as minority-owned, women-owned, service-disabled veteran-owned, and emerging small businesses are registered through the state’s Certification Office for Business Inclusion and Diversity – COBID for short. The similarity in name to the respiratory illness could be harmful to smaller businesses, McCoy said, so the group is suggesting that such businesses be referred to as “certified firms” rather than “COBID firms.”

“We don’t want there to be any moving stigma that continues to make these firms feel marginalized,” McCoy said. “They’re already small businesses trying to survive, and people can joke about how closely related they are, but at the end of the day the firms are telling me that they don’t see it as a laughing matter. That’s a very easy thing for us to start thinking about and considering.”

The requests aren’t being made with a concrete timeline in mind, McCoy said. Ultimately, the goal is for NAMC-Oregon and MCIP to have a seat at the table for decisions impacting their members and the minority contracting community as a whole. The organizations are not expecting change to occur overnight.

“It may not be impacting you today, but I guarantee our industry will be impacted a month from today,” McCoy said. “We don’t want to wait for that storm to come, so we’re trying to be proactive with things that people need to be considering.”

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John Downing has started his own business, worked in the public sector and now has returned to the private sector with Skanska USA Building.

All of those roles have prepared him well for his new position as director of outreach and diversity for Skanska’s Portland office, which is responsible for some of the largest construction projects in the metro area.

Oh, and Downing finished earning an MBA from Corban University in September while also learning to ride a unicycle, publishing several children’s books and helping raise his three children. It’s a busy life, and all in all, he’s glad to be back to work in Portland, where he already has deep roots.

“I was in the Portland community with (the Oregon Department of Transportation) for quite a while,” he said. “There were a lot of partnerships and collaboration efforts, and I’m getting plugged into those once again and really re-establishing myself in those communities.”

While Downing once ran Atlas Professional Services, a short-lived firm that worked with underground construction, public infrastructure and utility acceptance testing, he also made his mark in the ODOT civil rights division as its business programs manager. There, he worked to provide equitable contractor engagement throughout the state as he developed programs to connect small businesses with governmental agencies and their capital projects.

Now he’s back working in a familiar role, albeit in the private sector. In short, Downing is looking to find minority-owned businesses interested in partnering on projects with Skanska, much like he did for the state up until three years ago. This primarily has to do with Oregon’s Certification Office for Business Inclusion and Diversity, or COBID. This program certifies qualified businesses or contractors owned by minorities or women. Using those certifications, prime contractors or others can fulfill state or federal diversity mandates required of public projects. These standards are also widely used in the private sector, which is where Downing comes in with Skanska, one of the largest prime contractors on the West Coast.

“It’s a lot of public-facing interaction,” he said. “I work with a lot with advocate groups for small businesses owned by minorities and women, and we talk about anything and everybody.”

Community building is a big part of this process, he said, noting he works with groups such as the Metropolitan Contractor Improvement Program, the Oregon Association of Minority Entrepreneurs and the National Association of Minority Contractors‘ Oregon chapter.

“I interact with those groups that are trying to build their communities in different ways through construction, specifically,” he said. “And then I collaborate with a lot of public agencies, prime contractors and growing contractors to help those same communities.”

In the Northwest, Downing has found it difficult to find enough certified contractors for Skanska to partner with. The same was true when he worked for ODOT.

“We do these big projects with a lot of requirements, a lot safety involved,” he said. “So how does someone like Skanska work with an owner to help remove the barriers to make it more appealing for small companies? That’s a challenge … the reality is there are not enough out there, there’s too much work and not enough contractors to fill these goals.”

Trust issues also come into play.

“You have companies out there, and I was one of them, not really trusting the government,” Downing said. “There are some businesses out there that just won’t go down that road.”

Part of the issue could be the amount of financial and other confidential information required of applicants. But Downing doesn’t think that’s the entire story.

“It’s really not that invasive, but some people are overly cautious,” he said. “There are a fair amount of people who wouldn’t necessarily get certified, yet public agencies want us to use certified firms. So there’s this gap; how do you bridge that? It usually takes seeing other small businesses getting certified to break down those barriers.”

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The regional government Metro has announced it intends to award Colas Construction its largest contract ever to a minority-owned business.

The $27 million contract is to serve as construction manager-general contractor for the Plaza, Entries and Interiors project at the 27-year-old Oregon Convention Center. Colas Construction will spruce up the facility in anticipation of the $244 million Hyatt Regency Portland hotel, which Mortenson Construction recently began building.

Portland-based Colas Construction will partner on the project with fellow black-owned firm Raimore Construction, which will perform civil work.

Metro issued an award notice Aug. 31. Team members are expected to sign the contract Monday, according to a Metro project manager. The contract will include a provision to give back to the community 1 percent of the project cost.

The contract award represents a sort of full-circle moment in the history of race relations in Portland, Metro spokeswoman Karol Collymore said. Many black-owned homes were razed in the 1980s to make way for construction of the convention center, she added.

Activist groups like the Coalition of Black Men protested loudly, believing that no jobs on the project went to people from the dislocated communities, said Tony Jones, executive director of the Metropolitan Contractor Improvement Partnership.

“It’s great that 30 years later, we have two African-American-led contractors finally getting the opportunity to work on the convention center,” he said.

Jones praised Metro’s procurement process, which gave added weight to firms that partnered with a woman-owned or minority-owned business.

Metro received two other qualified bids: one from Hoffman Construction, in partnership with minority-owned Pacificmark Construction, and one from minority-owned O’Neill/Walsh Community Builders.

In addition to altering the scoring of the proposals, Metro placed minorities with contracting experience on the panel that interviewed respondents.

“Colas and Raimore had the best interview,” Metro spokeswoman Karol Collymore said. “Their proposal was very strong and they were clearly the front-runner throughout the process.”

Colas Construction was founded in Oregon in 1997 by Haitian immigrant Hermann Colas. Today, his son Andrew runs the business and daughter Aneshka Colas-Dickson is vice president and CFO.

Raimore was founded by Andre Raiford and Jeff Moreland Sr.

Representatives of both firms were unresponsive to phone messages left this week.

Under the proposed project scope, an external plaza will be redesigned to create “clearly navigable space” for the public. The project also includes modifications to the convention center’s main entrances, which will result in improved access and visual identification, according to the request for proposals. The scope also includes upgrades to several lobbies, meeting spaces and concourses.

The project was broken into two packages for bidding purposes – an interior package focusing on the convention center, and an exterior package focusing on the plaza, Metro senior project manager Brent Shelby said.

“We were looking at that as a way of bringing a smaller, associate firm as a way for them to build experience as a general contractor,” he said.

Shelby said that also beneficial in procuring minority-owned firms is the CM-GC alternative contracting method, which allows the builder to get involved earlier in the process and build relationships with minority owners. The method, said to help on more complicated projects, will allow Colas and Raimore to work closely with Metro to sequence construction in concert with the convention center’s busy events calendar.

Other complicating factors include some structural work on the ceiling of the massive Oregon Ballroom, and high standards for sustainability. (A Leadership in Energy & Environmental Design rating will not be pursued for the improvement project itself; however, the convention center is rated LEED platinum, so the contract will include many green conditions.)

Work is scheduled to begin in August 2018 and conclude by May 2019.

The design team is being led by LMN Architects of Seattle and includes Portland-based Merryman Barnes Architects and Mayer/Reed Inc.

Of the 3,741 firms certified by Oregon’s Certification Office for Business Inclusion and Diversity, 205 are owned by African-American men and 105 are owned by African-American women.

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In 1996, stakeholders in Portland were fed up with the dearth of public contracts going to woman- and minority-owned companies, and the relative lack of women and minorities in the workforce. City leaders pledged to do better, establishing programs to increase “participation,” which hovered between 3 and 5 percent total for those groups.

Twenty years later, those facts are all roughly the same. O’Neill Electric President Maurice Rahming, a regular voice on this issue, said now he and others are working to keep things from getting worse.

“Ideally, we’d like to see those numbers go up,” he said, “but realistically, we’re fighting to keep those extremely low numbers. We’ve been doing this for 20 years. We’ve been setting goals, but we haven’t been meeting them.”

What’s new today is that the construction industry in Portland is beset by the disruptive effects of a building boom and a labor shortage. To adjust, there’s talk in City Hall of using less of the low-bid procurement method, and “disaggregating” DMWESB data. There are also calls on private industry to step up.

“Looking at the latest data the city has, it still shows very low utilization of minority and women contractors,” said Tony Jones, executive director of the Metropolitan Contractor Improvement Partnership. “While there’s been lots of effort over the last 20 years, when we look at the results, they’re the same.”

Eager for change, at long last

Earlier this month, a shaky half-year after the Portland City Council established the Equitable Contracting and Purchasing Commission, members – including Rahming and Jones – approved a no confidence motion against the city council. The vote will have little practical impact, city officials say. But it did lay bare tensions that had simmered on the commission for six months.

The city later delayed release of video of the meeting and left key details out of meeting minutes, as first reported in The Oregonian.

Commission members received an email asking them to not speak on behalf of the ECPC.

Josh Alpert, the mayor’s chief of staff, said he takes “full blame” for the flare-up. When Mayor Charlie Hales shifted his focus to addressing the problems of homelessness and housing affordability, the business of the ECPC and other matters were pushed aside. Alpert said the city could have done a better job preparing and communicating with the commission.

“There’s a lot that’s been tried over the past few decades, and the numbers really haven’t moved a whole lot,” Alpert said. “The whole point of establishing this commission was to address that.”

In 2007-08, the city awarded minority-owned businesses just $80,000 of $91 million in construction contracts, according to a by the Center to Advance Racial Equity at Portland State University. In 2013, the state of Oregon awarded minorities less than $2 million out of $2 billion, or less than 1 percent.

Last week the commission held a retreat, to “hit the reset button,” according to Alpert. The city hasn’t been effective in finding incentives for established construction firms, he said, “other than all the good reasons that are already out there.”

There are several notable examples of partnerships between a large general contractor and a large DMWESB firm, including R&H Construction and Colas Construction, and Walsh Construction and O’Neill Electric.

The city of Chicago has policies that support large firms that already work with diverse subs on their private projects, Jones said.

“They’re looking at: How do you act when no one’s looking?” he said.

Last week Rahming attended an input-gathering session related to the impending $195 million overhaul of the Portland Building. The council has committed to spending 1 percent of the construction cost on efforts supporting diversity. The meeting was one of two held to determine how that money should be spent.

Interested parties filled out comment cards, calling for pre-apprentice training for women, and for data breaking down minority goals by ethnicity. Nkenge Harmon Johnson, president of the Urban League of Portland, wondered why they weren’t discussing the “99 percent.”

“We’ve heard all this before,” she said after the meeting.

The city is still hopeful that women and minorities play a major role in the interior remodel and seismic upgrade of the 33-year-old Portland Building. The project team opted to pursue the “progressive” design-build method, which brings builders into the fold earlier and allows for closer collaboration between private parties and city staff, according to Christine Moody, the city’s chief procurement officer. This could go a long way toward ensuring diversity targets are reached, she said.

The customary low-bid method required by state law tends to favor larger companies, Moody said. And those larger companies tend to favor larger subcontractors they’ve worked with before.

“In my experience, doing an alternative method allows us more flexibility,” Moody said.

Under Oregon law, getting a project exempted from the low-bid requirement is a lengthy process, one involving completion of a 14-finding test and posting notice for two weeks. One of the findings is for cost savings, meaning alternative procurements are chosen typically for larger projects, where the city can make up costs in the design phase.

Advocates like Nate McCoy of the National Association of Minority Contractors‘ Oregon chapter and Jones of MCIP favor breaking open the initials DMWESB to “disaggregate” the data used by governments. Too often companies will circumvent hiring goals by playing with these numbers, McCoy said.

“Pretty much, most of the certifications are white-dominated certifications,” he said.

At last week’s input-gathering meeting, several attendees said there’s no need for the city to spend money on further studies when their groups have already studied the issue.

Moody said that for the city to use such outside data, it must have been gathered using methodologies that would hold up in court. She suggested at the meeting that a portion of the 1 percent set-aside could be used on a study disaggregating the city’s data – an idea met with frustration by some in attendance.

Acting in ‘good faith’

The city isn’t the only institution in the Portland area performing projects. TriMet, Metro and the Port of Portland fall under the guidelines of the federal Disadvantaged Business program. Multnomah County has a big upcoming courthouse project as well and also maintains six bridges in the Portland area. Portland’s public school districts, subject to state law, also offer opportunities to contractors.

Since 1996, the Portland City Council has adopted a number of policies in this arena, for construction as well as professional services. For each city project, there’s a workforce goal of 18 percent minorities for apprentices and journey-level workers, and 9 percent women.

There are also subcontracting goals, which the city is in the process of changing. The city’s existing “good faith effort” program requires that 35 percent of subcontracts go to women and minorities, and that general contractors act in good faith to reach that total. (State law currently prevents disincentives from being attached to diversity goals.) The city hopes to roll out in the next few months a new program requiring that 20 percent of the overall construction cost go to DMWESBs.

“If you’re not subcontracting anything, it’s kind of easy to meet that existing goal of 35 percent,” Moody said. “When we move to the 20 percent, the contractor can decide what they want to self-perform, and what they want to sub out; they just have to worry about meeting that 20 percent.”

The city also has its Prime Contractor Development program, which emerged from a 2009 disparity study finding that far fewer prime contracts went to women and minorities. The program allows state-certified DMWESB firms to bid against each other – rather than against major firms – for smaller city projects.

Swimming with sharks

Gale Schmidt, who owns A2 Fabrication, said there are lots of “sharks” out there.

“If you’re small, you really get tossed around and chewed on quite a bit,” she said.

Schmidt has been in business since 1996. She has nine employees and recently completed her largest project to date, a $3 million job supplying about a mile of railings for TriMet’s Portland-Milwaukie light-rail line.

Sizable change orders that a major contractor wouldn’t bat an eyelash at can mean success or death for a firm like A2. Schmidt says there’s subtle pressure by general contractors to be agreeable to such changes, or risk not being included in future projects.

Another factor, Schmidt said, is that often bid packages for public projects are too large for a small startup. Last week she saw a posting seeking a steel supplier, including $100,000 in structural beams, along with ornamental steel, railings and other materials. Schmidt could’ve provided the ornamental steel, she said, but not nearly all the steel for the entire job. So she didn’t submit a bid.

It’s this way for other trade divisions. Schmidt said this issue comes up often in conversations with other minority subcontractors. The city’s Christine Moody said alternative procurement methods like construction manager-general contractor or design-build have a better track record because they give general contractors the time and flexibility to break down those large bid packages.

Val Solorzano has operated COAT Traffic Control for more than 10 years. The acronym stands for Chick of All Trades, though these days she focuses mainly on flagging-related work. Many minority owners operate on the fringes, as subcontractors in fields like flagging and custodial work. This helps explain why total wages for minorities are lower than white for large projects like the recent Sellwood Bridge replacement.

Swimming with the sharks on large projects – where payments can take up to 90 days – can quickly sink small, emerging firms. Solorzano suggested establishing a fund for small businesses to draw off.

“You have to be tough, or they won’t respect you,” she said.

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