50th EPISODE! TRANSCRIPT: A closer look at the Small Business Chittlin Circuit in Houston, Tx. | CoH METRO Transit

You can listen to the show @: Houston LIVE! | METRO Transit Authority

Download the Mayor of Houston’s METRO Transition Task Force Report

~ Beginning of Transcript

Good Afternoon, this is Rudy Sutherland and I am your host for today’s episode of Houston LIVE!

You may be wondering why we are doing a radio show on Saturday, well today is a special day – today we celebrate our 50th episode on the Small Business Talk Show platform. I want to sincerely thank all of you who have unwaveringly supported us from the very beginning 3 years ago.

Today’s show is the 7th in the Series “A closer look at the Small Business Chittlin Circuit in Houston, Tx.” centers on the CoH METRO Small/Disadvantaged Business Enterprise (SB/DBE) Program

Directed by Karen Hudson, the Small/Disadvantaged Business Enterprise (SB/DBE) Program of Houston METRO was created to provide additional opportunities for Small Business and Disadvantaged Business Enterprises to participate in contracting and procurement opportunities within METRO. METRO’s SB/DBE Program operates in a race and gender neutral manner and is designed to include all segments of the region’s business community and is open to participation without regard to race, color, sex, religion, national or ethnic origin, age or disability. This show will explain the findings of the Mayor’s transition team and how you can navigate this entity effectively.

If you are a professional services organization, and not a White-male owned publicly traded firm or derivative of one; I recommend that you PASSIVELY spend your resources to obtain opportunities at Houston METRO.

Houston METRO is a very unique animal as it pertains to small business and is very good at what it does regarding them. Very simply, the “good ole boy” engineer management team runs the organization and snubs there noses at the thought of changing the way they procure services.

This is why, historically, the majority of business that DBE firms have obtained with the agency have been manual labor, subcontracted work.

The latest venue being METRO Solutions…

But, before we get started I would like to thank our sponsors, this show is made possible by the generous support of my firm ALJUCAR & Co., the premier strategic consulting & program management firm in the SBA 8(a) & VA Serviced Disabled Veteran Programs; ECCHIES Uniforms, a women-owned business who’s tag line is “buy direct, for less”; and Major funding is provided by 8(a) certified LinTech Global, who’s tag line is “Business &Technology Solutions that Make Sense” get more information on LinTech @ http://www.lintechglobal.com; and, Project & Knowledge Concepts, an 8(a) certified project & program management powerhouse with offices in Herndon, Virginia and Franklin, NC;   AND Additional funding is provided by Meridian Working Capital: whose tag line is “Providing capital today for tomorrow’s growth!”.

Again, in this episode, I will address how Houston METRO has a track record of discrimination against Disadvantaged Business Enterprises in the area of Professional Services; how the “good ole’ boy” subjective Source Selection Process and framework enables discrimination and how NAICs Code choice manipulation for DBE participation goals has the consequence of insuring DBE participation in professional services remains anemic on federally funded contracts.

In short, I posit that today, the Houston Metropolitan Transit Authority is a bastion of institutional discrimination against Disadvantaged Business Enterprises; despite the marketing campaign that it has and is investing in to say the opposite. However, there is hope; which I will discuss later in the show.

But 1st, I would like to establish an Objective Argument of Discrimination by Houston METRO through Institutional Practices

To demonstrate my allegation of institutional discrimination, I posit that it is an undeniable fact that there are Professional Services (administrative, technical, and management) required as part of every federally funded project pursued by Houston METRO. Secondly, it is also undeniable that the choice of NAICs codes by METRO management, as to which areas of Professional Services work they will afford to DBEs as a goal; is a random subjective choice. And, it is an undeniable fact that this choice of NAICs codes is made by METRO management without a formal accountability to any outside party, including the FTA (we know this as a result of the current ongoing re-review of the FY 2010 Methodology Review by the FTA). Finally, it is also fact that the expectation (by the FTA and all other stakeholders) of what work will be officially available and goaled to DBEs is managed by single choice of METRO management.

If you accept these as fact, I then posit that METRO executive management has the subjective “least common-denominator” control over which areas of work are afforded to DBEs on federally funded projects pursued by the Agency. And further, that by omitting NAICs codes, specifically Professional Services codes, from its annual DBE goal that (but for their omission) could be performed by DBE sub-groups. Further, the practice of METRO management not “unbundling” and putting the work out for bid individually but rather allowing it to remain part of enormous contracts that are to large for DBEs to bid on (or even small businesses for that matter); DBEs are being excluded from participation.

Title VI of the Civil Rights Act of 1964 provides that:

“[n]o person in the United States shall, on the ground of race, color, or national origin, be EXCLUDED FROM PARTICIPATION IN, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance”.

Thus, I posit that DBEs are being actively and systematically discriminated against through subjectively chosen Institutional Practices (and procedures) by METRO management.

So, in sum Houston METRO to date has been akin to Las Vegas, the House always wins; however there is hope due to the new leadership that has been put in place.

The newly minted Mayor of Houston, Annise Parker, commissioned a TRANSITION TASK FORCE to review the METRO SBE Program.

On May 13th of this year, the task force reported the following key findings:

  1. METRO’s SBE Program has good intentions but lacks sufficient, credible accountability.
  2. METRO’s “Good Faith Efforts” have good intentions, however they also have obstacles to prevent inclusion.
  3. METRO’s SBE Program has experienced some success but the program lacks sufficient articulation and communication of that success.
  4. METRO’s lack of understanding of some of the professional service industries makes it unable to uncover abuse of the program in these areas.
  5. Not all contracts are written with consistent SBE contract language.
  6. Some SBE/DBEs find it difficult to get in to do business with METRO, METRO Solutions & HRT
  7. Solicitations (RFPs) are put out then cancelled without any notification (there is a cost associated to the SBE to participate).
  8. Many opportunities for SB participation are not designed or attractive for SBE to participate (they seem to be designed for large firms).
  9. METRO’s SBE Program Managers see themselves with an “A” grade while the SBE community sees the program very differently (possibly a “D-”).
  10. Some SBEs who ask for debriefings are not granted one.
  11. Some Program Advisors believe that METRO Solutions is reaching out and meeting the small business goals (#’s high), but they believe that METRO’s Corporate SBE goals should be monitored as well.
  12. Some Prime contractors are not using Program Advisors to maximize the use of SBEs on METRO contracts resulting in subs being asked to participate in the initial phase without being allowed to carry out the work (no letter of intent).
  13. Some Program Advisors believe the scope of work is altered to fit companies, and METRO’s preferred vendors (politically connected), who want to do the work.
  14. There is a disconnect between the METRO SBE Program and the SB participants regarding their processes(debriefings, responses, and RFPs processes).
  • One SB complained that she was told of an award of a contract then kept receiving calls regarding the same contract and, additionally, the amount kept changing. Others have complained that the SBE program is just “too political.”

This Task Force was made up of the following individuals:

  • Karen Becerra, Chair
  • Shad Bogany
  • Tim Dinh
  • Linda Morales
  • Ed Ryland

I know some of these individuals, some better than others, and want to personally thank them all for there service in bringing these issues to light in such an objective fashion.

Now, let’s look at their 6 recommendations:

The sobriety of this endeavor by these individuals is apparent, base upon their recognition of the following:

  • Long term relationships will be disturbed and some political concerns may develop.
  • Cost to implement Certified Accountability Program will require financial commitment
  • There might be some reluctance by staff to change the culture.

Nevertheless, the boldness of the following speaks volumes to the merited hope of these individuals:

1) Ensure full disclosure of financial and nonfinancial benefits received by contractors, as well potential conflicts of interest; specifically:

  • Provide a full and clear understanding of how a contractor may benefit by soliciting input from industry leaders.
  • Document and make third-party financial and nonfinancial benefits a part of total benefits received and include it in the SBE goals.
  • Require Contractors, Sub-contractors, and employees to disclose their current and prior relationships with heads of departments and others in key decision making positions.

2) To implement a “Certified Accountability Program”; specifically:

  • Engage an outside CPA firm to audit and certify METRO’s and Prime Contractor’s Small/DBE Spending
  • Hold Department Heads accountable for the validity and accuracy of information provided by Primes
  • Hold Department Heads accountable for increasing and ensuring the maximum amount of participation of Small/DBE firms.
  • Implement a “Reward Discipline” Program for all contracts with Small/DBE goals

3) To eliminate the “Sacred Cow” contracts; specifically:

Implement a Task Force for each to investigate those services that have historically received little scrutiny and increase the level of Small/DBE participation i.e.

  • Legal
  • Real Estate
  • Accounting
  • Suppliers
  • Construction
  • Equipment

Let me add…

  • Engineering
  • Procurement Support, and
  • Project/Program Management

Let me also add that the focus should be on Prime Contractor opportunities, and not just those of the Sub-contractor genre.

4) To implement “Success Story” marketing; specifically:

  • Identify Small/DBE success stories and obtain testimonials
  • Develop a METRO Success Story Campaign
  • Solicit and promote success stories internally
  • Engage entire organization in building and identifying success stories. (There needs to be a Culture Change)

5) That all SBE contract language be consistent in all contracts; specifically:

  • All contracts that have SBE goals should have the same contract language and requirements. This should be METRO’s “Standard Operating Procedure” for all contracts with SBE goals.

6) Implement an incentive or disincentive program for Primes (like METRO Solutions has implemented with the HRT contract); specifically:

  • All contracts that have SBE goals should have an incentive program to encourage Primes exceeding their SBE goals AND a disincentive program (or some penalty) when Primes do not meet their SBE goals.

Finally, they establish that METRO staff should forecast Small Business needs so that Houston SB Community can create and build capacity to meet those future needs while maintaining the “Hire Houston First” and “Buy Houston First” messages. The put fort that this should be a part of the METRO Board’s Mission.

In conclusion they state:

It is critical that this effort continue to raise issues, highlight successes and demand accountability; it should not end with the sunset of this committee. What we realize from our past experiences is that when oversight and questions go away the abuse and lack of accountability return. This is a tremendous opportunity to bring credibility and integrity to an agency that has been questionable for years. SBE businesses have the ability to bring value to the community while also helping to bring creative innovative cost saving solutions. This effort must and should continue.

I feel no need to add or take away from this statement, only to say Amen.

Thank you for joining us this afternoon and, until next time, One Voice…

~ End of Transcript

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