Mayor calls legal challenge ‘unjust’ as city OKs replacement for minority-, women-owned biz support

Kansas City is moving ahead with a plan to replace its decades-old, but recently-disputed Minority and Women-owned Business Enterprise program with a new initiative focused on small and local businesses.

The City Council passed the ordinance 12-0 Thursday afternoon — setting the stage for the city to begin developing and implementing the replacement, which was prompted by a lawsuit brought this summer by Missouri Attorney General Catherine Hanawa.

Kansas City’s goal is to lawfully ensure smaller businesses have a better shot at competing for city contracts against larger incumbent firms that have a history of winning bids, said Quinton Lucas, mayor of Kansas City, Missouri.

“It’s more important for us, I think, to make sure that we are growing our community,” he told Startland News.

The change comes as Kansas City faces new legal limits on how local governments can use race and gender in contracting programs. The city’s shift follows Hanaway’s July lawsuit — that argues race- and sex-based preferences in government contracting violate the Fourteenth Amendment’s Equal Protection Clause — as well as a U.S. Supreme Court decision limiting such considerations.

What the new program would look like

Kansas City has operated its M/WBE program since 1981. The program was created to address barriers that have made it harder for minority- and women-owned businesses to compete for government contracts.

The new program would instead create three levels for small and local businesses, with additional consideration given to veteran-owned ventures:

• Local Business Enterprise (LBE): Local firms eligible for participation goals on construction contracts of $25 million or more.
• Local Small Business Enterprise (LSBE): Small local firms eligible for participation goals on contracts of $400,000 or more.
• Emerging Business Enterprise (EBE): The smallest firms, eligible for set-aside contracts and bid incentives on projects under $400,000. EBEs could also receive up to 10% upfront, have no retainage withheld and get paid every two weeks.

The city would set an annual participation goal for certified small and local businesses.

The program would also continue joint venture opportunities, along with services to help businesses with bonding, financing and technical assistance.

To qualify, businesses would need to be headquartered in the Kansas City metro or have a real and substantial presence in the area.

 

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What will change

The council’s approval starts a transition period rather than an immediate switch.

City officials plan to meet with contractors, chambers of commerce, business groups, community organizations and advocates as it works out the details. Those conversations will help determine who qualifies, how certification will work and how the new program will affect city contracts.

The proposal directs the city manager to develop the program and report back to the City Council within 30 days. The city also plans to conduct another disparity study in five years.

Some contracts already in the pipeline will be affected. According to city documents, contracts that have been advertised but have not yet opened for bids will have their M/WBE goals removed. Bids that have already opened but have not been awarded will have their goals reduced to zero.

Existing MWBE and Small Local Business Enterprise certifications are expected to transition into the new system.

Quinton Lucas, mayor of Kansas City, smiles in Council Chambers before a critical vote on the city’s small business support; photo by Taylor Wilmore, Startland News

A shift in small business support

Lucas said the shift does not mean Kansas City is stepping away from its efforts to support minority-owned businesses or other small companies.

“This will continue to have a large percentage of contracts available to small and local business enterprises,” he said of the new program. “It will continue to have goals. It will continue to make sure that we take care of the workforce in the ways necessary for the future of Kansas City.”

Lucas pointed to the city’s response during the COVID-19 pandemic and contracts tied to the new terminal at Kansas City International Airport as examples of how the city has created opportunities for smaller businesses.

He also pushed back against efforts to end programs aimed at supporting minority-owned businesses.

“It’s ridiculous. I think this is something that is unjust, and I think it’s something that harms our community long term,” said Lucas. “I’m heartened by the fact that we’ve been able to come up with adaptive ways to create new solutions, and I look forward to us continuing to do that work.”