Indianapolis imposes penalties on vendors that don’t meet minority-contracting goals

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The Indianapolis City-County Council on Monday approved a measure that gives teeth to the city’s minority-contracting program.

Proposal No. 231 amends the code governing the Office of Minority-Owned and Women-Owned Business Enterprise to strengthen oversight of bidder commitments to meeting city expectations regarding the use of minority-owned firms.

The changes would allow officials to withhold payments from vendors, terminate their contracts or bar them from future city contracts if they don’t comply with the program.

The council voted 20-5 along party lines to approve the changes, with the Republican caucus casting the no votes.

The proposal calls for conducting a disparity study every five years and creating a utilization plan for minority-owned, women-owned, disabled-owned and veteran-owned businesses based on the disparity study’s results. Every city and county contract would be subject to adhering to the utilization plan.

Currently, city code calls for utilizing minority-owned, women-owned, disabled-owned and veteran-owned businesses (also known as XBE) for public works projects and procurement of goods and services for at least 27% of the dollars spent—15% for minority-owned, 8% for women-owned, 1% for disabled-owned and 3% for veteran-owned.

The goals have been in place for a long time but are not regularly updated, and there has been no ramifications for vendors or contractors that fail to meet those goals.

By amending the code to require a disparity study and utilization plan, plus laying out penalties for contractors that fail to meet goals, the City-County Council aims to eliminate discriminatory outcomes in contracting practices.

Contractors will be required to make a “good faith effort” to reach the city’s contracting goals. That effort will be judged by the Office of Minority-Owned and Women-Owned Business Enterprise, which will consider a variety of actions taken by the contractor to meet the goals, including advertising in minority-focused media for at least 10 days before bids are due; mailings to XBE firms notifying them of contracting opportunities; documented reasons why an XBE firm’s bid was rejected; and documented efforts to provide technical assistance to any XBE firm in obtaining the bonding or insurance required by the city, among others.

If OMWBE’s director determines that a vendor failed to comply with the provisions of the utilization plan, actions could be taken against the contractor.

In committee, some members took issue with the ramifications because they felt the process didn’t give contractors enough opportunities to hear about their shortcoming and try to correct them.

But Camille Blunt, director of the office, said there would be many opportunities for the city to meet with contractors and for contractors to discuss what they’re struggling with in terms of using minority businesses before any action is taken.

The goal is not to impose fines, she said. Rather, it’s to ensure the contracting process is inclusive.

As approved Monday, the ordinance now calls for the office to meet with the contracting agency to discuss correcting deficiencies before a written notice would be issued to a vendor.

Once the notice is issued, the vendor would be required to meet with the Office of Minority-Owned and Women-Owned Business Enterprise.

If the noncompliance isn’t corrected, the office could withhold a portion or all future payments for the project until the vendor is in compliance; place the vendor on the city’s debarred vendor list, which prevents them from bidding on other contracts for a period of time; or terminate the contract agreement.

The ordinance also includes a provision for vendors and contractors to contest the office’s findings. During that period, any penalties would be paused.

Minority Leader Brian Mowery, who also voted against the proposal in committee, said he didn’t understand where the money withheld from contractors would go and had other questions during committee that were never answered, leading to his no vote.

After Mowery voted no, the council’s attorney said the money would stay in the contracting agency’s budget.

The ordinance change had been championed by Mayor Joe Hogsett. The changes came as a direct result of a disparity study conducted during 2019, the first that had been conducted by the city in 25 years, which found that minority- and woman-owned businesses are substantially underutilized in the city’s contracting and procurement processes.

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