In fiscal year 2015, the State of Washington spent more than $5.4 billion on contracting with private sector companies. However, only 2.9 percent of that revenue went to small businesses owned by either minorities, women, or veterans.
It was for this reason that Gov. Jay Inslee formed the Business Diversity Subcabinet, a body tasked with identifying the causes of dwindling participation among diverse businesses in state contracting, as well as reviewing state laws, policies, and practices that may be impeding businesses from participating.
“Washington’s diversity is one of its greatest economic and cultural strengths,” Inslee said in a 2015 statement addressing the need to establish such a subcabinet. “Successful small businesses led by women, minorities, and veterans help make our economy and our families more resilient. Our rate of finding these talented and qualified contractors must improve.”
The cabinet’s goal? To see 21 percent of state contracting dollars go to more diverse small businesses. This includes 10 percent minority-owned, six percent women-owned, and five percent veteran-owned.
The following year, a task force of Tacoma community leaders was instrumental in guiding Tacoma Public Schools to, in part, adopt many of the governor’s goals to invest the community. The group devised a Community Inclusion Commitment which — in addition to mirroring Inslee’s 10 percent minority-owned and six percent women-owned goals — also stipulated a goal of five percent small business enterprises, 30 percent local hiring on small and large construction jobs, and well as a possible career pathway program for recent graduates.
It’s a lofty goal for public projects such as building or remodeling a school, but Alicia Lawver, program manager for the district’s Community Inclusion Commitment project, said it is a vital goal.
“This work is possible, and it’s necessary,” Lawver said. “For the school district, our inclusion efforts are the full circle of investing in the community that invested in us. We’re providing jobs for our families and neighbors, and creating career paths for our kids. We’re making Tacoma a better place for everyone.”
Faced with the impression that these goals seemed more aspirational than attainable, the question for Lawver and the district was, “How do we accomplish this?”
The district soon adjusted much of the language it used when it put projects out to bid, and it held networking events to encourage general contractors and subcontractors to meet one another. But Lawver said, ultimately, the district laid out its expectations about the goals it wanted to meet and, ideally, exceed on its projects.
“All of a sudden, the people around the table — the architects, the contractors, the supervisors — were no longer all white men,” Lawver said. “All of a sudden, you saw color, you saw women.”
Korsmo Construction Diversity Program Manager Rachael Pease — who has worked closely with Lawver, the City of Tacoma, and the district on inclusion — said she unquestionably remembers the first Tacoma Public Schools meeting she attended during which the district laid out its inclusion goals to an elementary school gymnasium packed with potential contractors.
“They talked about, of course, constructability, the building, and the budget, but they mainly focused on the local community and the Minority and Women Business Enterprises (MWBE),” Pease said. “They were basically like, ‘We know it’s a goal, but it’s not.’ They made it very clear that you will meet these goals.”
Morris Aldridge, the district’s executive director of planning and construction, is very careful to remind contractors that the district “can’t legally make anyone do anything” when it comes to who a contractor can hire. But he doesn’t pull his punches, either.
“We told them what the district’s goals are, and part of our scoring apparatus (for hiring contractors) is asking what their plan for inclusion is,” Aldrige said. “Then we make it part of their contract and they understand that this is no longer a lip service thing.”
And many construction companies began to adjust their procedures to become more inclusive in the subcontractors they use. In fact, Pease said her position at Tacoma-based Korsmo Construction is largely due to these goals.
“We were bidding a project with Tacoma Schools and I was able to — because of (the district) and their movement on these goals — create this program under the guidelines that they gave us,” Pease said.
Pease’s job is multi-faceted. She oversees all bidding projects and she makes sure Korsmo is casting a wider net to all subcontractors instead of just the handful the company has been doing business with for the last decade or more. Adding incentives for larger contractors to fall in line with the goals was another task that fell on Pease and her team.
“We went into our subcontracts and bidding documents, changed the language for our bigger clients, and said that if they won this and they were not a certified company, that we would waive their retention bond if they helped us reach our goal,” Pease said. “Instead of punishing them and beating them with a stick, we just gave them a carrot — that has actually been really successful.”
But Pease said with the hurdles companies have to jump over, the bulk of her day-to-day job is matchmaking and mentoring. “I will bring a small business that can’t bond, and I partner them with a larger firm so they can work together,” she said.
Pease recalled one particular Tacoma Schools project where a small painting business won a bid but began having second thoughts about the scope of the project.
“He came back to us after he won (the bid) and he said, ‘You know, I feel like I’m too small of a company and I don’t feel like I have the capacity to do this project,’” Pease recalled. “I reached out to another painting firm that had wanted to work with us — they were a larger company — and we all met at my office, we built a relationship and created a joint venture. So, this larger painting company is bringing on this smaller guy, mentoring him, but yet also allowing him to have the job.”
The program appears to be working, according to Tacoma Schools, which reported local hiring at 10 percent above its self-imposed 30 percent goal for the third year in a row.
Moreover, the district’s first contractor under the new practices is slated to complete two major district capital replacement projects with more than 60 percent local participation and more than 20 percent minority participation, which Lawver said is “virtually unheard of.”
Korsmo’s Pease said the model Tacoma Schools has set is so successful because the dedication the district has shown also is unheard of.
“Tacoma schools is really setting a standard and high expectation,” Pease said. “It’s like a movement they are doing. People are watching, and I think (the district) is really going to set the pace for the expectation on those goals.”