Study Finds Disparities in Milwaukee City Contracts

On Tuesday, the City of Milwaukee Common Council formally adopted the findings and recommendations of a recent disparity study, which found a significant underutilization of minority-owned and women-owned businesses in city contracts.

Over the past 6 years, 15th district Ald. Russell Stamper II has been advocating for the creation of this study. In 2017, he sponsored an amendment to the budget, allocating $500,000 towards the future study. An additional 2018 budget amendment allocated an additional $500,000 towards it, bringing the total sum up to $1 million. It passed 12-3 in the Common Council.

In 2021, after receiving numerous bids, the city chose to contract the Atlanta-based Griffin & Strong P.C. firm.

Through analyzing the allocation of $1,113,764,154 worth of city contracts in relation to relevant estimates of business-ownership from 2015-2019, Griffin & Strong statistically identified several disparities in city contracting practices. They listed several recommendations to remedy these disparities. Such recommendations include setting internal goals for contracting minority or women-owned businesses, and making some contracts specific to small-businesses. They also proposed stricter monitoring of contract compliance to increase the effectiveness of current bid preference programs.

The 288-page study was first introduced during a Community and Economic Development Committee special meeting on Nov. 27. 

“You’re not setting goals that need to be met necessarily by your prime contractors, but you’re encouraging inclusion, you’re encouraging participation, knowing what the availability is,” David Maher, legal partner of Griffin & Strong, explained to the committee.

After discussing for 2.5 hours, they voted 4-0 for the findings to be considered by the Common Council, with Ald. Stamper, Rainey, Pratt and Taylor voting.

The study “shows the lopsidedness and the disparity in Milwaukee,” Alderman Stamper said during Tuesday’s Common Council meeting. “We have an opportunity to make it equitable and provide equal opportunity for all in the City of Milwaukee.”

Aldermen Question Recommendation

Ald. Scott Spiker introduced an amendment to remove recommendation six from the motion. The recommendation addresses raising the apprenticeship requirement threshold. Currently, companies must have an apprenticeship program to be considered for city construction contracts exceeding $100,000. It proposes raising this threshold to $1,000,000. The study argued this threshold had previously been a barrier for small businesses. 

Spiker noted that the motion states: “the city is committed to implementing all recommendations of the 2023 Disparity Study.” Because of this, he expressed caution about endorsing the recommendation, saying, “As of now, I do not want to be on record. And I think my union-friendly colleagues wouldn’t want to be on record as saying they endorse a recommendation to raise the apprenticeship threshold until there’s been a full discussion of what the right number would be or whether this is a move we should take.” He continued to support the overall study, framing his proposal as a “quasi-friendly amendment.”

Ald. Marina Dimitrijevic questioned this recommendation as well, saying, “It kind of sounds like the apprenticeship program is being paired with being seen as a barrier, when also I think in general, apprenticeship programs are so important and a gateway in really adding to all types of diversity getting in.”

Ald. JoCasta Zamarripa also voiced her opinion, saying, “I support this study, but have concerns about number 6.” She is a voting member of the Community and Economic Development committee, but was absent during the committee’s vote to consider the study. She said that labor groups have expressed concerns to the committee focused on recommendation six. 

Ald. Stamper continued defending his original motion, explaining, “Today’s vote is for recommendation. Laws still have to be written, departments still have to put them together, and throughout that process, all aldermen are welcome, particularly anyone who has concerns or questions.” 

Stamper was joined by Ald. Robert Bauman, who said Spiker’s amendment was “symbolism more than substance.”

Spiker’s amendment failed 6-9. The original motion was passed 13-1, which adopted the findings and recommendations of the study. Zamarripa voted no and Stamper abstained.

Previous Milwaukee Disparity Study

The City of Milwaukee had already attempted a similar study in 2010. The D. Wilson Consulting Group study also had claimed a statistically significant disparity in the city’s contracting of minority or women-owned companies.

However, ordinances implemented from the study’s recommendations were challenged in a 2013 lawsuit by the Hispanic Chamber of Commerce of Wisconsin and the American Indian Chamber of Commerce. The court ruled that the study was statistically invalid, causing the city to suspend race or gender-conscious programs. The new study claims it supports “a basis to introduce race and gender conscious remedies or policies toward that goal.”

Additional Study Findings

The study included many additional data findings related to Milwaukee City contracts. The study noted that the city has had a history of delayed payments to contractors. According to the study, 12.5% of companies reported waiting as long as 89 days to receive payment, while 1.6% reported waiting more than 120 days. This is despite the City of Milwaukee having a 30-day prompt pay act.

When Griffin & Strong asked local contractors if “they believe there is an informal network of prime and subcontractors doing business with the city that monopolizes the public contracting process,” 67.3% of overall respondents said yes.