When Harrisburg officials broke ground on a vacant parcel on 3rd Street in November, they hailed it as a landmark day for the city.
The Public Works Department and Capital Region Water were finally starting a long-awaited repaving project, which would improve the heavily trafficked artery for a two-mile stretch from downtown to Uptown. It was the first such undertaking on that street since 1999.
But where many saw progress, Councilman Cornelius Johnson saw a problem. The project had a budget of $5.5 million, but less than 5 percent* of the funds were pledged to go to businesses owned by women and minorities.
“3rd Street was an eye-opener,” Johnson said last month. “We have to be able to divide up work to make sure it’s fair and equitable to everybody.”
Since the 3rd Street repaving began, Johnson has forced a conversation among council members and city officials about Harrisburg’s commitment to hiring disadvantaged business enterprises (DBEs)—a recognized business category that includes minority business enterprises (MBEs) and women business enterprises (WBEs). A business can seek MBE or WBE certification if 51 percent of its ownership is controlled by minorities or women, respectively.
Most large cities across the country have policies designed to draw DBEs into public projects. Harrisburg has its own ordinance, passed in 1983, that sets minimum rates for DBE participation in city contracts. The ordinance established reporting procedures for each city department and appointed a DBE coordinator to enforce them. In the decades since it passed, however, Harrisburg’s finances collapsed to the point of near-bankruptcy. The city halted its capital improvement spending, and the systems put in place to track DBE participation also deteriorated.
In December, as City Council considered a budget that included $6.5 million in capital improvement projects, Johnson brought the issue back to the fore. He wanted to know how many DBEs partook in city projects as contractors and sub-contractors, and what share they formed of the city’s total vendor base.
As it turns out, answering those questions wasn’t so easy. Due to a lack of data, it’s not clear if the city is in compliance with the rates set forth in its own ordinance. City officials also doubt whether it holds up to current affirmative action law. Marc Woolley, the city’s new business administrator, said he’s in the process of rebuilding the systems that encourage DBE participation.
“I think people have been trying to adhere to the ordinance as written, but it’s been really decentralized,” said Woolley, who started his job in city hall last October. “Right now, I’m trying to get my arms around it and centralize it.”
As the city prepares to spend millions of dollars on capital projects, Woolley thinks it’s imperative that Harrisburg markets itself to local DBEs. But some small business owners say that, without more opportunities for vocational training and professional enrichment, the pipeline might be short.
A Fair Shot
Both Johnson and Woolley know that Harrisburg’s ability to hire more DBEs is constrained by supply in the local labor force.
The city currently maintains a list of certified MBE/WBE vendors, who offer services from welding and bricklaying to architecture and consulting. Though the majority are based in the Harrisburg metro area (including York and Lancaster), a handful hail from Pittsburgh, Philadelphia, New Jersey and Delaware. The roster reveals a tradeoff that might face the city in the short term: Should departments keep their contracts close to home, or award them to certified DBEs that will boost participation rates?
Woolley favors keeping business local. He said that Harrisburg’s years of financial hardship led to some attrition in its business network, but he’s optimistic that the city can reach more DBEs without going far afield. It’s a matter of seeking out local firms, adding them to the city’s Rolodex, and informing them of opportunities for work, he said.
“We know these businesses are out there, but we have to turn on the ‘open for business’ sign,” Woolley said. “We have more lucrative projects coming up, which will increase some interest, and we want to make sure everyone has a fair shot.”
Woolley is currently verifying the DBE status of every vendor that the city has hired in the past three years—a list of more than 400 firms. He hopes to wrap up the “painstaking” process by April, at which point he can update the DBE directory and calculate the city’s participation rate. As Harrisburg taps back into DBE networks, Woolley hopes he will encounter new businesses to add to its directory.
Even so, both Woolley and Johnson know that adding a DBE to a city roster won’t necessarily net them contracts. Public entities are required by law to award a contract to the lowest responsible bidder—the qualified company that proposes the smallest budget for a project. Affirmative action and employment laws constrain a city’s right to give preference to a DBE over another bidder. City Solicitor Neil Grover said that affirmative action hiring policies are under constant evaluation in city halls across the county. Oftentimes, he said, a city won’t know the limits of the law until it finds itself as a defendant in a lawsuit.
“It’s an issue of competing rights,” Grover said. “You may want to give the job to an MBE, but the lowest responsible bidder may say ‘you have to give that to me.’”
If Harrisburg wants to raise DBE participation in public projects, it will also have to work with businesses to make them more competitive bidders, and encourage prime contractors—the large firms that lead major projects—to hire DBEs as service providers. Johnson hopes that process will start on March 7, when the city will host a DBE workshop with Capital Region Water. The free event will brief participants on bidding practices, DBE certification options, and upcoming project opportunities within the city. It will also instruct DBEs how to seek out work as subcontractors.
“We have to make sure we’re developing an environment where all of our clients are mixing and mingling with minority subcontractors, so they know who’s in the game and who does what,” Johnson said. “Then, when it comes time for a project, people are already connected.”
Dean Carter is exactly the type of businessman that Harrisburg wants to hire. He’s an African-American man who has run Dr. Roof, a roofing company in Harrisburg, since 1989. He’s included in Harrisburg’s DBE directory but generally doesn’t advertise his MBE status “unless someone asks.” He knows that what makes him attractive for public projects could preclude him from getting jobs in the private sector.
“Ninety percent of the time, when someone calls me on the phone, they can’t tell if I’m black or white until I get to the job site,” Carter said. “But numerous times, I’ve been in situations where I get to the job, and I can see the apprehension.”
Carter did a roofing job for the city at Hall Manor last year, but doesn’t bid on many public projects. He tends to favor private, residential jobs instead.
“When you’re dealing with a homeowner, you can get going right away,” Carter said. “It’s faster money.”
He contrasted that with his experience at Hall Manor. During that project, he recalled waiting two or three weeks to get his down payment, due to the city’s schedule for cutting checks and allocating grant funds. Carter also explained that public projects can carry risk for small businesses, since firms are always trying to shave their prices to produce the lowest bid. He said that he’s lost money on some bids because he didn’t budget a large enough profit margin.
Since Carter runs the company himself, he also can’t always justify the time and energy required to prepare bids for public projects. He thinks he would bid more often if he had an in-house administrative team to help him prepare the paperwork. He hopes that this month’s DBE workshop will give him insight on how to navigate more public projects and produce professional, competitive bids.
A graduate of now-closed William Penn Technical High School, Carter learned his trade as an apprentice to Bill Jackson, who owned Jackson Roofers and Siding in Harrisburg until his death last year. Carter relies on a small corps of contract employees to help out with jobs, many of whom are in their 50s and 60s. His workforce illustrates another problem that Harrisburg will have to overcome if it wishes to create a pipeline of tradespeople.
“There’s not that many younger people to hire with roofing skills,” Carter said. “These older guys have been doing it a long time, but I’ve learned the skill level is not there with the younger guys. They’re not happy with them.”
Johnson and Woolley both recognize that their efforts to empower DBEs will only succeed if they cultivate the next generation of entrepreneurs and tradespeople through education, guidance and mentorship. Johnson said the city may look to Capital Region Water as an example.
In 2016, CRW launched its diversity business partners program, which aims to diversify CRW’s pool of vendors and encourage women and minorities to enter the trades and start businesses. According to Marc Kurowski, chairman of CRW’s board, this means marketing Harrisburg and the surrounding region as a profitable business climate.
“There’s going to be a lot of money flowing through the city pretty soon,” Kurowski said. “Just from CRW projects alone, if someone wanted to start a business in the city, they could kill it.”
Kurowski was referring to the $315 million in sewer upgrades that CRW has planned for the next two decades, part of an effort to bring the system into compliance with federal environmental standards. It’s one of many large-scale building projects expected to inject jobs and dollars into Harrisburg’s economy in the coming years.
The city is also slated to be the site of new federal courthouse and state Archives buildings. Harrisburg’s own city government plans to spend millions in 2018 renovating Reservoir Park, repairing roofs on fire stations, paving roads, and installing ADA ramps on sidewalks. In the private sector, Harrisburg University has proposed building a $150 million downtown skyscraper.
In short, Harrisburg has a string of promising investments on the horizon. According to Johnson, that makes it even more important for the city to build a diverse business network today.
“We have a lot of money that will be spent locally, and, if we’re not thinking about [DBEs] now, it’ll be business as usual,” Johnson said. “This is an issue where the city can be a leader.”
*City Engineer Wayne Martin pointed out that the 2 percent figure only included contracts that were committed at the start of the project, not potential contracts that were still in negotiation. As a result, the total participation of MBE/WBE businesses could be higher than 2 percent by the time the project is completed. Eight percent of funds disbursed to date have gone to MBE or WBEs, though Martin said that number could drop as the project continue.