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The City Council is considering whether or not to reject a request from the Department of Transportation to set aside contracting rules that are intended to foster small local businesses after hearing from a group of Oakland business owners who said the waiver would perpetuate inequities in the local economy.
Members of the Oakland African American Chamber of Commerce, NAACP Oakland Chapter, National Association of Minority Contractors Northern California, the Oakland Latino Chamber of Commerce, and other organizations rallied in front of City Hall before Tuesday’s council meeting to call attention to the little-known city contracting rules, which they say are too often set aside.
Oakland is currently in the process of awarding several multi-million dollar contracts to repave city streets. Under Oakland’s Local and Small Local Business Enterprise Program, local firms are given preference when submitting bids. Companies that don’t have a significant presence in Oakland and don’t qualify as a small business can also bid on city contracts, but the policy requires them to use a significant percentage of the contract money to hire subcontractors located in Oakland. First approved in 2011, the goal of the program is to foster the local economy and small businesses, ensuring Oakland tax dollars benefit residents.
The city opened up the bidding process for street paving contracts last September and received bids from three companies—Gallagher & Burk, McGuire & Hester, as well as O.C Jones and Sons—according to the staff report authored by Ryan Russo, director of the Department of Transportation. However, the three companies did not fulfill all the requirements for hiring local subcontractors. OakDOT submitted a request to the City Council to have the rules waived for all three companies in order to proceed with the work.
After hearing from groups opposed to the waiver, the City Council chose to delay the contracts and move discussion about the waiver to their Feb. 1 meeting. Councilmembers directed OakDOT to brief them more about what would happen if the city were to rebid the work.
“Oaklanders definitely want to see their potholes fixed and their streets paved,” said District 3 Councilmember Carroll Fife during the meeting, “and it’s also important that Black and minority contractors also have access to these contracts.”
Cathy Adams, president of the Oakland African American Chamber of Commerce, one of the groups opposed to the waiver, said the request further perpetuates a system that disadvantages local enterprises, many of which are Black-owned. “We demand an end to institutional racism rampant in the city’s contracting process,” Adams said at the press conference.
A letter sent by the NAACP Oakland Chapter to the City Council stated that waiving the requirement would “deny Oakland residents the opportunity to earn income.” The group noted the small local business rules are in place to ensure that 50% of work, on a craft-by-craft basis, and 15% of apprenticeship work, is performed by Oakland residents.
The groups want the City Council to have the contracts put back out to competitive bidding.
But in his report to the council, OakDOT Director Russo said that rebidding will only delay the paving work because the process for advertising, bidding, awarding the contract, and project implementation takes a minimum of four months. As a result, the city would fall behind on its plans to repave a significant number of streets.
Russo also wrote that he doubts rebidding the contracts will result in a different outcome.
The paving contracts are funded through Measure KK, a ballot measure passed in 2016 that generated $600 million for vital infrastructure maintenance improvements, including $350M for streets and sidewalks. The three firms seeking the contracts were each to be awarded $13,657,500 for their services.
Black contractors have long pointed to disparities in the city’s contract bidding process. Their experiences were recently confirmed by a study which showed disparities exist along racial and gender lines.
Across each of the four industries examined in the study—construction, professional services, goods, and services—Black contractors, as well as women of all races, were shown to receive a disproportionately low share of city contracts. White men received a disproportionately higher share of contracts than they would have under a fair system.
But those who are opposing the waiver for the paving contracts say the problems affect every Oakland-based business, not just those owned by Black people and women.
“When you waive the policy, it’s not just Black and women owned businesses that are affected,” said Bendu Griffin, an Oakland native and owner of contracting company Tonma who participated in Tuesday’s press conference. “Oakland residents will be denied work as well. It’s not a Black thing, it’s the right thing.”
Councilmembers Loren Taylor, Treva Reid, and Sheng Thao appeared at the press conference to show support. Taylor and Reid, also previously co-authored an ordinance that aims to make it easier for small, POC-led, and women-owned local businesses to compete for city contracts.
“Millions, if not billions, of dollars have generationally gone out the door,” said Reid. “It needs to stop today.”
“I will not support the approval of this waiver,” Taylor said.