Berkeley leaders call for change after study finds ‘shocking’ disparities in city contracting

Firms owned by people of color and women lost out on millions as contracts flowed disproportionately to white men, a report found.

Mayor Jesse Arreguín tours the Berkeley Way construction on Sept. 9, 2021.
A new analysis found significant racial disparities in Berkeley’s contracting for construction and other services. Credit: Supriya Yelimeli

Businesses owned by people of color and women lost out on more than $20 million worth of business with the city of Berkeley between 2016 and 2019, according to a new analysis that found the city disproportionately awarded contracts to firms owned by white men.

City leaders are now working on potential changes to contracting policies that aim to rectify the widespread disparities identified in a report released by the firm Mason Tillman Associates last week.

The report found that if businesses owned by people of color and white women were awarded contracts at a rate proportional to their share of bidders, they would’ve received $37.9 million worth of contracts over the four years the analysis covered. Instead, the total value of contracts for those firms was $16.2 million.

Businesses owned by white men, on the other hand, were awarded just over 80% of the city’s contracting dollars, when a proportional distribution would’ve given those businesses 57.5% of spending.

“We are effectively on notice of what appears to be a pretty significant case of continuous discrimination,” Councilmember Ben Bartlett, who requested the contracting study in 2017, said after a presentation on the data at Tuesday’s City Council meeting.

Researchers broke down contracts into three categories — goods and services, construction and professional services — which were further split based on their value, between “formal” contracts worth at least $25,000 and smaller “informal” deals.

Black-owned businesses were “underutilized,” meaning they were awarded contracts at a rate lower than their presence among bidders, at statistically significant levels across all six of the categories, according to the report. With large construction contracts, for instance, just 2.7% of the city’s spending was awarded to Black-owned firms, which would’ve expected to receive 16.2% of contract dollars if they were being distributed proportionally. As a result, the study estimated Black-owned construction firms lost out on more than $4.2 million.

The situation was even more dire for local Black businesses, despite a program in place since 1983 giving firms based in Berkeley a leg up in city contracting. Black-owned Berkeley businesses were not awarded a single contract over the four years covered in the study, while 7% of spending went to local firms overall.

Other racial groups and white women also experienced disparities, as the report found businesses owned by white men were “overutilized” at statistically significant levels across all categories.

Presenting the findings on Tuesday, Mason Tillman Associates CEO Eleanor Mason Ramsey told the council, “This analysis gives us evidence of intentional discrimination and systemic practices that account for, or (are) associated with, the findings of disparity.”

Mayor Jesse Arreguín called the data “shocking,” while Councilmember Sophie Hahn said she felt “ashamed and frustrated” that the city has not moved more urgently to change its practices.

Others described the data as validating. Bartlett said it confirmed what he “knew to be true anecdotally” after hearing from local Black business owners who felt shut out of city contracting, despite Berkeley’s progressive reputation.

“People have been complaining about it from day one,” Bartlett said in an interview. “They just feel like no one is on their side, and in this town of all towns.”

Mason Tillman Associates has conducted similar studies of government contracting across the country that also documented racial disparities; Oakland leaders made several changes to their contracting programs earlier this year, following a 2017 report from the firm. Based in Oakland, Mason Tillman Associates also investigated complaints of workplace discrimination brought by Berkeley city employees in 2014.

In its latest report, Mason Tillman presents Berkeley with a long list of recommendations for actions to address contracting disparities, some of which would give firms owned by people of color and white women a slight advantage in some bidding processes. Many of those efforts would have to be narrowly tailored to comply with federal court decisions that limit the scope of affirmative action programs, as well as California’s Proposition 209, the state constitutional amendment voters approved in 1996 and upheld last year, which broadly prohibits the consideration of race or gender in local government contracting and other public functions.

Arreguín said he will work with Bartlett and City Manager Dee Williams-Ridley to develop a set of policy changes in response to the report.

“We are committed to following up on this,” Williams-Ridley told the City Council.

Bartlett was particularly interested in the report’s recommendation that Berkeley create an Office of Racial Equity — an idea he and Councilmember Rashi Kesarwani proposed last year — saying that the office could oversee efforts to resolve disparities in contracting. He also supports providing more training to firms owned by women and people of color on how to navigate the contracting process and improve their bids.

Addressing these disparities is a step toward achieving the economic component of racial justice, Bartlett said.

“Coming off of the racial reckoning, as they call it, last year, people understand that we need to have corrective measures in place — and it’s more than just policing,” he said. “This is where the rubber meets the road.”

Nico Savidge is Berkeleyside's senior reporter covering city hall. Email: nico@berkeleyside.org. Twitter: NSavidge.