11b. Memo
Diversity in Contracting Annual Report
COMMISSION AGENDA MEMORANDUM Item No. 11b BRIEFING ITEM Date of Meeting April 12, 2022 DATE: April 6, 2022 TO: Stephen P. Metruck, Executive Director FROM: Dave McFadden, Managing Director, Economic Development Division Mian Rice, Director of Diversity in Contracting SUBJECT: Diversity in Contracting Annual Report EXECUTIVE SUMMARY The Diversity in Contracting Annual Report to the Commission provides the Port's division/department 2021 Woman and Minority Business Enterprise (WMBE) results, 2022 future department/division WMBE goals, and affirmative efforts to assure equality of contracting opportunities. 2021 was the third full year of the Diversity in Contracting program operations. Port divisions and departments established 2021 WMBE utilization goals. The Port of Seattle established a 16 percent WMBE utilization goal for 2021. This goal did not include construction projects where utilization goals are established on a project-by-project basis. Despite 2021's economic challenges, the Port continued to make great strides surpassing 2020's results in achieving a Port-wide WMBE utilization goal of 12.1% for 2021. In addition, the Port continues to make strides towards reaching its five-year goal of tripling the number of WMBE businesses working with the Port (344 WMBE firms vs five-year goal of 354 firms), by the year 2023. On an annual basis, the Port starts from zero in its tracking of firms utilized and percent achievements. As the Port continues to grow in its WMBE utilization, staff is continuing its positive steps to achieve the goals set forth by the Commission, including the continued focus on eliminating specific disparities in utilization for certain ethnic groups and women. BACKGROUND AND GOALS On January 9, 2018, the Port Commissioners adopted a new Diversity in Contracting (DC) policy directive with a supporting Resolution 3737, that drives equity in Port contracting. The policy was developed over the years of 2016-2017, using 2016 as the baseline for what was eventually passed. The purpose of this policy directive is to provide the maximum practicable opportunity for increased participation by minority and women owned and controlled businesses in Port contracting for public Template revised April 12, 2018. COMMISSION AGENDA Briefing Item No. 11b Page 2 of 6 Meeting Date: April 12, 2022 works, consulting services, supplies, materials, equipment, and other services to create the opportunity to leverage Port spending to increase WMBE utilization. As part of the Diversity in Contracting policy directive, the Port Commission established utilization goals for both the amount of contracting dollars paid to WMBE firms as well as the number of WMBE firms under contract to the Port using 2016 baseline utilization results: FIVE-YEAR GOALS 1) Triple the number of WMBE firms that contract with the Port, and 2) Increase to 15% the percentage of dollars spent on WMBE contracts This new policy also directs the establishment of: Executive level accountability that drives performance across the Port Port-wide goal setting and reporting processes, requiring Divisions/Departments to establish Annual WMBE Plans that set aspirational goals and performance targets Clear lines of responsibility and accountability for implementation with designated WMBE liaisons for each division Enhanced compliance and tracking of key performance objectives and incorporation of WMBE goals into the Port's Long-Range Plan Categories of contracts where inclusion plans, and other tools will be used Implementation and monitoring procedures to ensure prompt payment and change order processes Expanded technical assistance for WMBE firms, coordination with external partners, and support for internal training to Port staff 2021 RESULTS Last year was the third year of the DC policy/program implementation. Per the DC policy directive, every division/department sets WMBE aspirational goals prior to the beginning of the year, the 2020 total percentage was 16%. The table below illustrates by division the 2021 WMBE results for non-construction procurements which includes P-Card spend. The Port did not meet its 2021 non-construction goal of 16%. Although the target was missed, the Port invested over $26 million in WMBE firms for an overall utilization rate of 16.1%. The table below reflects the dollars in 2021 driven to WMBE businesses broken down by Division: 2021 Non-Construction 2021 Goal % Total Port Spend WMBE Spend WMBE % Utilization 2021 Division Aviation (AV) 16% $144,653,626 $17,734,128 12.3% Corporate 18% $26,903,881 $4,116,780 15.3% Economic Development 13% $3,280,584 $518,484 15.8% Division (EDD) Maritime Division (MD) 15% $25,124,214 $3,467,059 13.8% Template revised September 22, 2016. COMMISSION AGENDA Briefing Item No. 11b Page 3 of 6 Meeting Date: April 12, 2022 Northwest Seaport N/A $4,447,881 $533,951 12.0% Alliance (NWSA) P-Card Unclassified N/A $165,811 $13,400 Total $204,575997 $26,383,802 13.84% The Port of Seattle's Annual Divisional Goals are established on "non-Construction" spend in the Outside Service budgets Since the program launch, DC staff have established WMBE aspirational goals for Construction on a project-by-project basis. The table below illustrates the WMBE results on Construction per division for 2021, with a total WMBE utilization rate of 11.5%: *2021 Construction Total Port Spend WMBE Spend WMBE % Division Aviation (AV) $246,986,105 $29,037,487 11.8% Corporate $87,335 $6,967 8% Economic Development Division $2,898,163 $135 0% (EDD) Maritime Division (MD) $12,297,524 $1,173,022 9.5% North West Seaport Alliance $7,105,022 $62,853,857 11.3% (NWSA) Total $37,322,803 $325,178,389 11.5% *WMBE Aspirational Goals for Construction are set project-by-project The table below shows the final Port-wide WMBE attainment for 2021 per division/department, with a combined WMBE total (construction and non-construction) of 12.1%. The table also includes the number (344) of WMBE businesses utilized. 2021 Total Port Total Port Spend WMBE Spend WMBE % (Non-Construction & Construction Combined) Division Aviation (AV) $391,639,731 46,771,614 11.9% Corporate $27,046,620 $4,123,748 15.2% Economic Development Division $5,660,128 $518,484 8.4% (EDD) Maritime Division (MD) $32,781,657 $4,640,082 12.4% North West Seaport Alliance $4,447,881 $533,951 12.0% (NWSA) P-Card Unclassified $165,811 $13,400 0.0% Total (Percent) $530,738,524 $64,069,018 12.1% Total Number of WMBE Firms - - 344 Utilized Template revised September 22, 2016. COMMISSION AGENDA Briefing Item No. 11b Page 4 of 6 Meeting Date: April 12, 2022 The table below illustrates the annual progression of the Port's WMBE percentages and number of firms utilized for that given year. WMBE 2016 2017 2018* 2019 2020 2021 Utilization Percentage 5.3% 8.8% 8.9% 10% 10.9% 12.1% Number of 118 200 258 296 325 344 Firms *Diversity in Contacting program launch 2022 DIVISION/DEPARTMENT GOALS The table below provides the 2022 WMBE aspirational percent goals per division/department with a combined total goal of 15% utilization for non-construction procurements on outside services. Non-Construction Division Projected Total 2021 WMBE 2021 WMBE Goal Outside Projected Spend Services Spend Aviation Division (AV) $133,865,506 $20,079,826 15% Corporate $33,966,564 $4,755,319 14% Economic Development Division $5,259,683 $736,356 14% (EDD) Maritime Division (MD) $6,613,343 $1,058,135 16% Total $179,705,097 $26,629,635 15% Construction Annual WMBE Goal For the first time, the Port is establishing an initial construction WMBE goal. For 2022, the established WMBE goal is 12.5%. This initial goal was established by utilizing the 2021 construction WMBE results, plus one percent. Issues/Challenges Under the Diversity in Contracting (DC) Policy Directive, the Port's divisional efforts in setting annual 'non-construction' percent goals have been successful. The percent utilization of WMBE firms continues to be a positive influence. This includes the number (#) of WMBE firms utilized, which in 2021 was 344 firms. By the year 2023, the Ports five-year goal is a utilization of 354 WMBE firms. On an annual basis, the Port starts at zero in its quest to achieve its 5-year WMBE goals. However, under Washington State's construction bidding laws and policies, in conjunction with the State's anti-affirmative action clauses, government entities have far less control over WMBE utilization on low-bid lump sum procurements. As a result, WMBE participation might be impacted regardless of their overall availability to work on Port projects. Template revised September 22, 2016. COMMISSION AGENDA Briefing Item No. 11b Page 5 of 6 Meeting Date: April 12, 2022 The Port currently sets WMBE aspirational goals on a project-by-project basis, based upon project scope and WMBE availability. We have been averaging between eight to ten percent on our construction projects thus far. These averages will need to increase in order to achieve the set DC goals. The Port has made tremendous progress increasing the utilization of WMBE businesses. We are heading the right direction; however, we may fall short of hitting the Port's five-year goal of 15 percent utilization by the end of 2023, which is the final year of the established 5-year goal cycle. Recommendations The Port continue to set WMBE Divisional goals but explore expanded ways to improve upon the Construction utilization of WMBE firms. This would be done by: Leveraging more alternative delivery methods like Design/Build (D/B) or General Contractor/Construction Management (GC/CM) procurements. Alternative delivery methods such as these may allow Port staff to continue to push the construction contacting limits to not only achieve, but perhaps exceed project WMBE goals. Evaluate chances for unbundling of projects Further breakdown project scopes of work Better tie-in's with PortGen training participants within the consulting and A&E contracts Continue to outreach and conduct workshops/trainings Continued partnerships with community and trade organizations Continued partnerships with Primes The Port is conducting a study to identify barriers to WMBE utilization which can also help identify additional policy or program refinements that will help the Port achieve its current and future Diversity in Contracting policy goals. ATTACHMENTS TO THIS BRIEFING (1) Presentation PREVIOUS COMMISSION ACTIONS OR BRIEFINGS April 13, 2021 Diversity in Contracting Annual Report March 26, 2019 Diversity in Contracting Annual Report June 12, 2018 Commission briefing on Diversity in Contracting program development January 8, 2018 Diversity in Contracting 2nd reading policy & passage of resolution 3737 December 19, 2017 Diversity in Contracting Policy Review December 12, 2017 - Women and Minority Business Enterprise Policy Review Resolution 3737 (first reading) December 5, 2017 - Women and Minority Business Enterprise Policy Review November 28, 2017 Women and Minority Business Enterprise Policy Review October 24, 2017 - Women and Minority Business Enterprise Policy Review July 12, 2017 Commission Budget Priorities, Building Economic Opportunity in underserved Communities March 28, 2017 Small Business Development Update Template revised September 22, 2016. COMMISSION AGENDA Briefing Item No. 11b Page 6 of 6 Meeting Date: April 12, 2022 March 22, 2016 Small Business Utilization briefing December 14, 2014 Disparity Study briefing August 19, 2014 Small Business Utilization briefing January 26, 2010 Adoption of Resolution No. 3618 concerning small business utilization Template revised September 22, 2016.
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