Memphis city leaders raise doubts around how much money is actually reaching minority firms
The Memphis City Council cast doubt on the city of Memphis minority contracting program Tuesday morning.
Multiple members of the city council — Worth Morgan, Patrice Robinson and Chase Carlisle — asked skeptical questions of Memphis Mayor Jim Strickland's administration and exhibited wariness about the veracity of the city's numbers.
The Strickland administration revealed the amount of money paid to minority-and-women-owned businesses (knowns as MWBEs) for work on city projects increased over the past fiscal year.. According to the city, 23.94% of the city's eligible spending was with MWBEs. That's up from last year's 22.93%.
This year's spending figure amounts to $87.7 million compared to last year's $133.4 million in MWBE spending. The city attributed the decline to the completion of the Renasant Convention Center, which made city spending run higher than normal.
After the city presented the data to the city council, Robinson said she had heard from multiple minority subcontractors — firms doing a portion of a city project for a larger general contractor — that they had not gotten paid or not actually received the work the general contractor said they had assigned.
Ken Moody, the special assistant to Strickland and who now oversees the city's minority contracting office, disputed that, saying that any spending with MWBEs is tracked in city software systems and verified through looking at copies of invoices and check stubs.
Morgan, a councilman who has been skeptical of how minority contracting numbers have been reported in the past, asked Moody and Sarah Harris, the head of the city's office of performance management, about how spending is calculated. He asked if a minority firm receives a city contract but then subcontracts some of that work to a white-owned firm if all of the contract is then counted as MWBE spending.
Moody said that's not the case. Morgan replied that Moody's response was different than how the administration had answered the question previously.
In a text message to The Commercial Appeal, Morgan said, "After their answer, I'm concerned we don't follow up at all whether or not MWBEs subcontract out their work to non-MWBEs. The administration might be so eager to count the spend as 100% MWBE that they don't track (and don't want to) how the contracted work is actually fulfilled."
That skepticism from Morgan and Robinson was followed by Carlisle, whose family has developed prominent projects around the city over the past decade. He described what he felt was a broken system and called the MWBE program and numbers "window-dressing by another name."
Carlisle said the current system of minority contracting enables several firms to receive deals over and over again and it does not actually grow the capacity of small minority businesses to handle larger projects and prosper.
"The same individuals over and over that are getting awarded deals…. It’s not actually expanding the pool," Carlisle said. "People want to raise white equity in Memphis and present it through a Black-led LLC. It’s something that I know is around and has to change. The good intentions of these programs have been perverted…"
Moody and Harris presented the MWBE spending data to the council. No employees from the office of business diversity and compliance — the program that handles MWBE spending and compliance for the city was in attendance. The head of that department, Joann Massey, left the city in September.
The CA's reporting has revealed that Massey was placed on administrative leave before she left the city and that a private firm has interviewed employees within the department after her exit. Massey received a $67,000 severance package — $47,000 in compensation and $20,000 in executive training — from the city.
Tuesday was not the first time someone has questioned the city's accounting in regard to MWBE spending. In late 2018, as bidding on what would become the Renasant Convention Center was underway, a contractor called the process "smoke and mirrors," according to Memphis Business Journal reporting.
"These numbers that they are touting, I live them everyday and I'm telling you that they're smoke and mirrors," said Kirby Salton, CEO of Artizan Construction to the council on Nov. 20, 2018. He claimied that some businesses claiming to be female-owned actually weren't.
Samuel Hardiman covers Memphis city government, politics and energy for The Commercial Appeal. He can be reached by email at [email protected] or followed on Twitter at @samhardiman