Washburn University Institutional Repository

Kumaran, Muthusami

Griffin & Strong, P.C.

R eview of the Finance and dmi11istratio11 ab in et d . parity 
Di parity tudy fo r th ommonw alth of entuck (b riffin 
M. Kumaran Research & Information K HR 
RECEf t r:: D 
EXECUT1VE OIREClbR'S OFFJC 
-- · --~ -
On March 1 2003, The Finance and dministration Cabinet released the 
findings of the three-year study titled the Disparity tudy for the om.rnonwealth of 
Kentucky conducted by the Atlanta-based la firm of Griffin & trong. The stud was 
commissioned b the Go ernor s Minority Employment, Business Affairs and Economic 
elopment ouncil in response to se ral court rulings that establish d standards for 
go ernments use of race-based set asides for public contracting and purchasing. The 
stud commenc d in October 1999 ith exhausti e research on the condition of minority 
and omen-owned businesses in the omrnonwealth of Kentucky and their in olvement 
in state go ernment agencies contracts. 
The purpose of the disparity study was to evaluate the need and basis for the 
enactment of a Minority/Women Business Enterprise program by the ommonwealth of 
Kentuck . The stud b gins with a legal analysis of the most well-known case City of 
Richmond v. roson (1989) in hich the nited tates upreme Court ruled that race-
based set asides for public contracting and purchasing may only be used when e idence 
shows they are necessar to remedy the effects of discrimination in the marketplace. 
M thodology and Data: 
This exhausti e analytical study re iewed records from fiscal 1995 through fiscal 
1999. Besides the legal analysis an analysis of quantitati e e idence· a historical 
analysis· and analysis of purchasing policies practices and procedures; and an analysis of 
qualitati e e idence ere conducted to dra conclusions and recommendations. In order 
to pro ide quantitati e e idences the stud ernplo ed utilization and a ailability anal ses 
of minority and women owned enterprises in state contracts. Major data sources for the 
analyses were each cabinet's contract files contract logs vendor files Minority and 
White Female Business Enterprises (M/WFBEs) certification lists and relevant reports 
and studies detailing contracting acti ities. The analyses were conducted for the four 
major procurement categories of: Construction Architecture and Engineering (A/E) 
Commodities and on-professional ervices and Professional ervices. Prior to the 
analysis through a methodical data collection mechanism the study de eloped a data 
base of contracting history for each state government agency on each procurement 
category. Cross tabulation of procurement categories by ethnicity, gender and race 
provided the data disaggregation necessary to comput the utilization percentages and 
disparity indices by comparing utilization against the a ailability of M/WFBEs. 
inding : 
• During the stud period fiscal 1995 - fiscal 1999) of the total capital 
construc6on awards ( 283 millions) only 1.58% were awarded to M/WFBEs. 
African American business enterprises receiv d only 0.8% of th total awards and 
omen-owned firms recei ed onl 0.08%. M/WFBEs recei ed a slightly better 
2 
4.1 % of the total construction contracts ( 2 893 millions let through the 
Department of Transportation contracts. While white female and Asian owned 
firms w re th most successful in receiving transportation contracts (- .96% and 
1.14% respecti ely) frican American firms recei ed only 0.02%. 
• During the study period of the total Architectural and Engineering a ards ( 24 
millions only 0.17% were awarded t WFBEs and all of them went to African 
Am rican business enterpri es. 
• f the total Professional ef'Tices awards ($127 millions) 5% were award d to 
BEs. While white female and sian owned firms were the most successful 
in recei ing these contracts 3.92% and 1.1 % respecti ely African American 
firms recei ed none. 
• In the Commodities and on-professional ef'Tices procurement category of the 
total a ards of 703 millions M/WFBEs were awarded 5.56. White female 
owned firms received 3.16% of these contracts and 2.39% went to minorities 
hose ethnicity race and gend r could not b id ntified due to poor records. 
• Analysis of Disparity Indices using a ailability estimates deri ed from bid data 
sho s that: ati e American and Asian firms were not at all utiliz d. Women 
owned business were under-utilized relative to their availability during the study 
period. African American Hispanic were o er-utilized... hich essentially mean 
than there were disproportionate! fe African American and Hispanic firms bid 
for state go ernment contracts. 
• Analysis of Disparity Indic s using availability estimates based on ensus data 
shows an o erall under-utilization of M/WFBEs. Except for Hispanic owned 
firms (which are o er-utilized due to their lo overall statistically significant 
number) all other minority and white women enterprises were se erely unde-
utiJized. 
In its Historical Analysis the study cites various reports among hich is K HR s 
1995 report on Black Employment in Kentucky tale Agencies. The study states that' 
In 1995, the Kentucky Commission on Human Rights reported that the salary gap 
between white and black state employees narrowed.' 
In its Anal sis of Purchasing Policies Practices and Procedures, the report raises 
concerns on the following issues that seem to affect the participation/utilization of 
minority and female businesses in state go emment contracts: 
• Good old boy network 
• ommonwealth s passi ity with respect to pr viously identified 
barriers to minority businesses. 
• Lack of o er ight and nforcement of existing procedur s 
• Perception b minority businesses that ommonwealth 1s not 
serious about doing business with them. 
• Bundling on smaller contracts to create larger ones 
• Use of bids to a oid change orders to minority business 
• lo payment 
• Inflexible specifications and requirements 
• Point structures for source selection 
• tereotyped attitudes 
3 
• Inconsistent contracting practices 
• Inadequate minority data base 
For its Analysis of Qualitative Evidence, a series public hearings~ interviews with 
minority and female business entrepreneurs, contractors and public officials were 
conducted and the results were summarized into anecdotal evidences. These evidences 
reflect several forms ·of discriminations faced by M/WFBEs, which can be broadly 
classified into the following three categories: 
• General market conditions and barriers (which include: denial of 
opportunity to bid, lack of access to end-users, double standards in 
performance, exclusion from the "good ol' boy" network, 
collusion, lack of access to contracts, burdensome contracting 
requirements, and difficulty obtaining access to capital. 
• Discrimination that adversely affects WWFBEs to compete 
(which includes: stereotypical attitudes, bid shopping, bid 
manipulation, discrimination in bonding, discrimination in 
financing, discrimination in payments, discrimination by suppliers, 
use of front companies and pass-throughs) and 
• Discrimination that adversely affects the viability and capacity of 
WWFBEs (includes: fronts, government resistance in WWFBEs 
participation, unequal access to financing, unequal access to 
bonding, slow payment and non-payment, limitations ·on access to 
contracts). 
The study also lists the existing race and gender-neutral programs in the 
Commonwealth and recognizes their contribution to the promotion of WWFBEs. The 
include: Commonwealth's Small and Minority Business Division, Kentuckiana Minority 
Supplier Development Council, and the Community Development Bank. 
Conclusions: 
The following are the major conclusions of the study: 
• Minority and Women businesses are utilized at very low levels by the 
Commonwealth of Kentucky, which have a negativ~ impact on the entire 
economy. 
• The availability of minority and women-owned businesses for state government 
contracts is extremely low based on an analysis of firms who· actually seek to do 
business with the state. 
• There are substantial disparities between availability and utilization in some 
categories with respect to some ethnic groups. 
• A review of purchasing practices and policies show substantial institutional 
barriers which inhibits the ability of minority and women-owned businesses to 
compete effectively for business with the state government. · 
· • The perception of a lack of access, based on reality, results in very low levels of 
bidding by minority and women-owned businesses. 
4 
Recommendations: 
The following are the major recommendations of the study: 
1. The Commonwealth of.Kentucky needs to address the documented barriers to 
minority and women-owned business participation in its procurement and 
contracting activities. 
2. The authority and resources which are currently divided between the Finance 
and Administration Cabinet, Transportation , Cabinet, and Economic 
Development.Cabinet needs to be centralized in the Office of the Governor. 
3: The certification process needs to be centralized for the entire Commonwealth 
with adequate staff support. 
4. The Commonwealth of Kentucky should implement a ·management 
information system which can offer accurate and timely information about 
contract activity at every single stage. 
5. All .personnel involved in the purchasing and contracting process should be 
subject to quarterly performance reviews to ensure that they understand the 
objectives of utilizing minority and women-owned businesses. 
6. The Governor should consider issuing an Executive Order in which all state 
agencies are required to make a concerted effort to increase the level of 
minority and women-owned businesses in the state contracting process. 
7. The Commonwealth should review all contract specifications and remove 
barriers that inhibit the utilization of minority and women-owned businesses, 
and enhance its current outreach effort. 
8. The Commonwealth should consider the implementation of an aggressive 
program to expedite the payment of vendors, contractors and sub-contractors. 
9. Financing minority owned busiµesses serves a dual purpose. It provides 
needed capital to a fast growing business sector while creating a vehicle for 
greater minority participation in the workforce. 
10. The Louisville Community Bank is a national leader in the area of minority 
economic activity. The Commonwealth should attempt to partner with this 
bank to create a New Market Venture Capital and Business LINC program in 
partnership with the U.S Small Business Administration. 
Possible Legislative Measures that can follow-up the study: 
1. One of the serious issue highlighted by this study is the lack of adequate data on 
sub-contracting/sub-consulting information pertaining to minority and women-
owned businesses. An elaborate mechanism to collect these and other data needs 
to be established either in the form of a 'Minority and Women-Owned Business 
Information and Data Center' either at the Division of Small and Minority 
Business Division or at the Governor's Office of Minority __ Affairs. This can 
combine the :functions of information management and monitoring suggested by 
the study. 
2. One of the study's recommendations that an Executive Order in which all state 
agencies are required to. make a concerted effort to increase the level of minority 
and women-owned businesses in the state contracting process, can actually be 
modified into a legislative measure. 


English

Review

When Yakima Valley Colleg students demonstrated before an appearance of AF and Gorton, they behaved themsemsekves, according to article

Yakima Herald Republic

Tl3LIC 
69·23 
A demonstration 
As eampus demonstrations go, 
there was a superb performance out at 
the Yakima Valley College campus 
Tuesday when two candidates for 
state offices spoke to nearly 500 
st dents on ''Violence in America.'' 
Sade ton., Republican 
candida e attorney general, and 
Art 1 r, epublican candidate 
f Ii utenant gov rnor, were th 
speakers. Not one hint of a boo or a 
catcall was ·evident as the massed 
students listened politely then asked 
questions. 
We believe YVC students deserve 
hearty applause for showing that the 
are not only ladies and gentlemen but 
.citizens interested in what an 
candidate has to say. That' 
kind of demonstration that i 
joy to watch. 
~--~ - -- --- - -
-~ ------.1,...,.,...,. ~·· 


A Demonstration

Noting a report on using the "building block" concept to improve departmental functions, the undersecretary asks the assistant secretaries to apply the concept to their areas

Silberman, Lawrence H.

Various

Correspondence

Notice that several candidates, including AF, will appear at the Kittitas County Republican Women's Club

Ellensburg Record

t,J 
~l 11sburg . W11. 
C1t'c. D. 4 pl95 
S .A .S .S . 
. C\ 9 so& 
Repubican Party Features Candidates 
The tt as aunty Repub-
1 ican Women's Club will host 
their annual fund-raising card 
party Friday at the Eagle's 
Hall, 220 W. 4th with play to 
begin at 8 p. m. followed by 
refreshments. 
Candidates Stu ,.BJMsoe, Sid 
Flanagan, Art FU'fcher, Jack 
Metcalf, and Howard Sorenson 
will be present together with 
the upper county candidates 
Ray Lumaco and Lawrence 
Sharpe. 
There will be door prizes 
nd a grand prize for the 
bpoint winners in bridge and 
.. P ers are asked to 
bring their own cards, twc 
- decks for bridge and one for 
pinochle, but don't stay away 
if you haven't cards as they 
will be providedo 
The club is asking for prize 
donations. ''White Elepban '' 
items, baked goodies, jams, 
jellies, pickles, are especially 
suggested and may be dropped 
off at Le Page's Book hop .. 
Tickets at $1.25 each or $5 
for a table may be obtained 
from Allie Mundy, 962·2361 · 
Mary Lou Hall, 925-1998· or 
picked up at GOF Headquart· 
ers, 404 N. Pearl. 


Republican Party Features Candidates

The Chelan County GOP is sponsoring a $1.40 pp luncheon for AF atb a Wenatchee hotel, where he will speak

Cahsmere Valley Advertiser

Fletcher to Speak

Article on how people "reshuffle their businesses" to continue to receive government subsidies. Names Mississippi Senator Eastland and actor John Wayne

Kotz, Nick

Rich Farmers Split Holdings to Save Subsidies

Thanks recipient for 3/10/30 Perkins to Neighbors

Love, Ruby

Perkins, Romerio D.

Letter

Pittsburgh Mayor Peter Flaherty gives a speech about the coming of women's rights; AF is expected to arrive to speak later in the day

Hay, Carolyn

Women's Goal on Up and Up, Pete Says

Second page of draft letter of intrdouction to Bill Frist for JEB Bush's signature

Fletcher

Frist, William

Spokane Spokesman Review

1 c l ~)101'1 R-
S:p6k~. e ~W v v 
C D 88 52,,_ 
G \J 
s Ji s s. 
Rocky Wishes 
Fletcher · Luck 
J 
OLYMPIA (AP/ - Gov. Nel-
son A. Rocke£ ell er of New York 
has written Art Fletcher, Repub-
lican candidate for lieutenant 
governor, with good: wishes on 
his campaign. 
In the letter. released by 
Fletcher Wednesday, Rockefel-
ler- said, "Nothing could- serve 
the interests of the state .-better. 
or hold a higher promise for its 
future than re-election of Dan 
Evans with you at bis right hand 
as lieutenant governor." 


Not a member yet

Review

A Demonstration

Correspondence

Republican Party Features Candidates

Fletcher to Speak

Rich Farmers Split Holdings to Save Subsidies

Letter

Women's Goal on Up and Up, Pete Says

Correspondence

Rocky Wishes Fletcher Luck

576

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