In 1996, the County Board authorized the establishment of a race- and gender-neutral Small Business Enterprise (SBE) contracting program, based on the results of a 1995 disparity study. The Board’s action was supported by case law that required a public entity to first consider race- and gender-neutral measures before implementing narrowly-tailored[1] race- or gender-conscious measures to remedy documented disparities in its contracting portfolio. 

Since authorizing the county’s SBE program, county staff have aggressively sought to include SBE firms in county contracts. The success of these efforts has led to national recognition of the county’s SBE program. For example, in 2014, the county’s SBE program was cited by a national research and economic justice organization. The Insight Center for Community Economic Development, as among the nation’s best-administered race- and gender-neutral small, minority- and women-owned business enterprise programs, by a city or county.

In 2016, the county participated in a joint disparity study led by the state, along with eight other state and local entities – the Departments of Administration and Transportation, the Metropolitan Council, the Metropolitan Airports Commission, the Minnesota Colleges and Universities System, the Metropolitan Mosquito Control District and the Cities of Minneapolis and St. Paul. The county paid $160,000 to participate in this $1.4 million study.

The study found that the county’s neutral SBE program produced a greater utilization of minority-owned business (MBE) firms in county contracts than all but one of the other eight participating entities, which all administer race-conscious MBE programs. However, notwithstanding the comparative success of the county’s SBE program in promoting the inclusion of MBE firms in county contracts, the study found substantial disparities still exist in the utilization of available MBE and women-owned business (WBE) firms sufficient to warrant the introduction of narrowly-tailored race- and gender-conscious measures.

In light of the 2017 Joint Disparity Study findings and recommendations, County Administration is recommending the County Board supplement and enhance the SBE program. This recommendation reflects a recognition that the county’s SBE program has maximized its full potential and that increased utilization of small MBE and WBE firms in county contracts will require enhancing the SBE program with the use of race- and/or gender-conscious tools. Such supplementary measures could include setting contract-based SMBE and/or SWBE goals, at the prime- or sub-contractor level, or the enhanced use of shelter market programs, wherein available prequalified small MBE or WBE firms are given consideration for contracts. In recent years, the county established several sheltered market programs for the benefit of SBE firms, such as the Tax-Forfeited SBE Home Rehabilitation Program, the Targeted SBE Program, the IT Umbrella Contracting Program and the Consulting Services Program. These programs have incorporated a variety of race- and gender- neutral measures intended to reduce disparities. These recommendations are intended to supplement and create alternative options not eliminate the current SBE program. 

We are asking the County Board to delegate authority to the County Administrator to evaluate and employ narrowly-tailored race- and gender-conscious tools, on a case-by-case basis, to redress the disparities documented in the 2017 Minnesota Joint Disparity Study.       

Authorize set-aside contracts to promote private employer pathways for persons with disabilities, probationers and persons under county supervision - We are also requesting the County Board delegate authority to the County Administrator to award a limited amount of set-aside contracts under either of the two separate authorities cited in the resolution, to eligible businesses and organizations, in furtherance of the county’s employment pathways programs, such as the Productive Day Program. In recent years, the County Board and the Housing Redevelopment Authority have authorized set-aside contracts under these authorities to businesses and non-profit entities that employ persons with disabilities, probationers (through the Productive Day Enterprise Program) and other persons under county supervision who reside in Hennepin County. Use of this set-aside authority is a critical element of the county’s disparity reduction strategy for expanding career pathways with private employers for the above-noted populations. 

Renew Joint Powers Agreement (JPA) for the Central Certification Program (CERT) - In 1999, Hennepin County, Ramsey County, the City of Minneapolis and the City of Saint Paul (collectively, the Collaborative) launched a centralized program for certifying small businesses (SBEs), women-owned businesses (WBEs) and minority-owned businesses (MBEs). The certification program became known as the Central Certification (CERT) Program. In 2004, the two cities and the two counties entered into a joint powers agreement (JPA). Under the JPA, the City of St. Paul was designated the “Lead Agency” of the collaborative, with responsibility for administrative matters.  The city has continued to serve in that capacity and the other collaborative members each pay an annual administrative fee to the city, based on actual costs. In 2017 the county paid $29,762.

The CERT Collaborative has been an effective structure through which the county has collaborated with the other Metro-area local governments to develop and deliver business development services and resources to local small businesses. The term for the new JPA is May 1, 2018 through December 31, 2020, unless terminated sooner. 

Streamline AA/EEO contract compliance for non-construction vendors - It has been a long-standing Hennepin County policy to accept a non-construction contractor’s evidence of affirmative action/equal employment opportunity (AA/EEO) compliance from another public entity, such as the Minnesota Department of Human Rights (MDHR), in lieu of requiring the business to submit an affirmative action plan to Hennepin County for approval. At present, 369 county non-construction vendors had their affirmative action plans certified by MDHR, which shows that the state and county share a large common pool of vendors.

We recommend further streamlining county AA/EEO requirements for non-construction vendors by requiring them to maintain a workforce certificate of compliance from the MDHR. This change will provide vendors with one common path to AA/EEO compliance that will better position them to do business in the State of Minnesota where the MDHR certificate is widely accepted.

The Minnesota Human Rights Act requires a business interested in a state contract to obtain a workforce certificate from the MDHR prior to bidding on, responding to a request for proposal, or executing a contract for goods or services in excess of $100,000. Therefore, any vendor may submit an affirmative action plan to the MDHR, which issues workforce certificates for a four year period for a fee of $150.

The staff time that will be freed-up from approving and monitoring affirmative action plans will be refocused on efforts to include historically underutilized businesses – small MBE and WBE firms - in county contracts.

Purchasing Department to Coordinate department-level contract inclusion goals to reduce contracting disparities - We are recommending the Purchasing Department work with other departments to set department-level, and where applicable, program-level, contract inclusion goals based on a department’s historic and authorized spending in relation to the available SBE, SMBE & SWBE firms for such contracts. The applicable programs to which contract inclusion goals would apply include the Consulting Services Program, the IT Umbrella Contracts Program and the Designer Selection Committee process.

[1] “Narrowly-tailored” means that serious consideration has first been given to race- and gender- neutral measures, and that any race- and gender-conscious measures have been designed to be limited in nature. Courts have given weight to several factors when evaluating whether a race- and/or gender- conscious program is narrowly tailored, including: (1) flexibility; (2) good faith efforts provisions; (3) waiver provisions; (4) limited to remediate discrimination within the local government’s jurisdiction; (5) program is reviewed for efficacy and is intended to be of limited duration; (6) tailored to relevant labor market; (7) limited to benefiting only those minority groups for which there is evidence of discrimination; and (8) the program’s impact on rights of third parties is considered.