Mayor Pete’s South Bend Awarded No Major Contracts to Black-Owned Firms for Three Years

DES MOINES, Iowa—Of the many pledges that Pete Buttigieg has made in his as-yet unfruitful quest to earn the support of black voters, his guarantee that a quarter out of every federal contracting dollar will be awarded to minority- and women-owned businesses is one of his most ambitious. 

“Look at what it would be like if we were co-investing in promising businesses led by black entrepreneurs, start-ups and other kinds of businesses that have the best track record of creating the kind of employment that can help lift people up economically,” Buttigieg told BET in September.

But an analysis of such spending during Buttigieg’s tenure as mayor of South Bend, Indiana, shows that the presidential hopeful fell dramatically short of that goal. According to a 2019 study analyzing the city’s contract data conducted by Colette Holt & Associates, a national law and consulting firm specializing in disparity studies, the city of South Bend did not award a major contract to a black-owned business for three straight years.

The study found that from 2015 through 2017, the city of South Bend distributed $83,675,547 in contract dollars, roughly 12 percent of the city’s contracts, to businesses owned by racial and gender minorities—and none to a black-owned business, despite the study finding that there were more than 200 qualifying minority-owned firms in the market at the time.

Minority-owned and women-owned businesses make up 15 percent of the market in the city, which means that while South Bend was close to achieving proportional awards for some categories, black-owned businesses continued to lag. While the city is more than 25 percent black by population, eligible black-owned contractors make up a mere 3.25 percent. More than 88 percent of contracts between 2015 and 2017 went to businesses not owned by women or racial minorities.

At the same time, Buttigieg’s administration awarded numerous lucrative contracts to past campaign donors and to corporations whose lobbyists and executives had given to Buttigieg’s mayoral election efforts.

One minority business owner told the study’s authors that South Bend employees “are trained to believe that black folks, poor people, or minorities can’t deliver,” and that she keeps her status as the owner of a minority-owned business under wraps because the “stigma” has kept her from winning contracts.

“I really felt like [the city of South Bend] didn’t want me to have the job. It wasn’t because I wasn’t the best at what I do, because I am—it was just because they would say, ‘Well, you don’t need that much money,’ like, ‘You just a little black girl. You won't need that much money,’” she told the study’s authors. “Our problem is that people are trained to believe that black folks, poor people, or minorities can’t deliver… There’s a whole lot of black people in here that wanna do something, and somebody needs to see that.” 

Another black business owner said that the difficulty in obtaining South Bend city contracts had even led to some minority-owned businesses to go under.

“There are black-owned construction companies, but one reason a lot of them that I talked to went out of business [is] because they can’t get contracts with the city,” the business owner said. “So, they can’t get any big contracts, then they have to try to build their business with only small ones, and it’s hard to maintain a cash flow with the other issues that you deal with.” 

The analysis, titled “The South Bend Disparity Study” and produced at Buttigieg’s behest, measured contracts and subcontracts worth $50,000 and up, and found a 72.38 percent disparity ratio for contract utilization of minority-owned business enterprises in the city. That ratio measures the participation of a group in contracting opportunities by dividing that group’s utilization by the availability of that group to participate in the contracting process.

A disparity ratio of less than 100 indicates that a given group is utilized less than would be expected based on availability; a ratio of less than 80 percent has been presented by the Equal Employment Opportunity Commission as indicating a prima facie case of discrimination.

Buttigieg’s poor track record on awarding city contracts to minority- and women-owned businesses has been reported before. In November 2019, shortly after his proposal mandating that the city award 15 percent of its contracts to minority- and women-owned businesses was passed through South Bend’s city council, the Intercept reported that Buttigieg had only awarded 3 percent of city contracts to black-owned businesses as mayor, citing annual audits conducted by the city.

But the outside analysis by Colette Holt & Associates, revealing the eye-popping three-year stretch with zero contract awards to black-owned businesses, has not been reported, and comes at a moment when even Buttigieg’s most diehard fans are growing increasingly anxious that his statistically insignificant support among black registered voters represents an insurmountable obstacle to his electability.

“It is a concern! It is a concern about the South—can he win in the South? Can he win the black vote?” June Schindler, a potential supporter, told The Daily Beast, at a Buttigieg town hall in Ottumwa on Tuesday. “It’s a concern.”

Buttigieg’s campaign pointed to the small number of eligible black-owned firms in the region as a partial explanation for why South Bend lagged so far behind the former mayor’s Douglass Plan. In an interview with Charlamagne Tha God last week, Buttigieg explained that the disparity study was a painful but crucial step to understanding how the city would address the problem in the future.

“We found out that we are below where we ought to be,” Buttigieg said, of the city’s contracts with black-owned firms. “That wasn’t a surprise, but now I had the legal power to do something about it.”

While Buttigieg has touted the creation of a training program aimed at helping minority-owned and women-owned businesses apply for city contracts, the city was slow to improve the city’s designated official in charge of ensuring minority- and women-owned businesses were being included in the selection process. 

In 2014, Buttigieg’s office proposed cutting the hours for the city’s Diversity Compliance Officer position from 32 hours a week to 18 hours per week. At the time, members of the city’s Common Council expressed open concern that cutting the officer’s hours would undermine efforts to expand the number of contracts awarded to such businesses.

“I don’t think 18 hours per week is going to be enough to support the goals of the ordinance,” said Valerie Schey, a Democrat on the council, in August 2014. “Even with a 32-hour workweek, the workload has been enormous.”

The move would have saved the city roughly $18,000 per year.

In 2016, that role was instead changed following the signing of an executive order by Buttigieg ordering the creation of South Bend’s Office of Diversity & Inclusion, a position intended to boost the number of contracts and subcontracts to minority- and women-owned businesses with the job description of “[leading] efforts to make hiring and management practices more inclusive, and city purchasing more diverse.”

Christina Brooks, who served as South Bend’s first Diversity & Inclusion Officer until last year and hired the firm Colette Holt and Associates to conduct a disparity study, said in a statement that the shift in resources was critical for the city to understand how poor its history of awarding contracts to minority-owned businesses had been up to that point.

 “It wasn’t a priority for three decades until Pete shifted resources to really focus on this by creating a department that was intentional about supporting, creating, and sustaining women- and minority-owned businesses and building up capacity,” Brooks said.

During the same three-year period that black-owned businesses received zero dollars in city contracts, South Bend did award plenty of city contracts to businesses owned by white men—including several generous political donors who had supported Buttigieg’s mayoral campaigns and his ill-fated run for Indiana state treasurer in 2010.

Among the beneficiaries of city contracts include lobbyist Brad Queisser, whose lobbying firm, mCapitol, and its parent company, MWH, gave $2,000 in cash and an in-kind contribution of $2,577.82 to Buttigieg’s 2011 mayoral campaign. The firm was later contracted to lobby the federal government on South Bend’s behalf, and was paid $230,000 over the next three years for its lobbying work. In 2014, MWH was awarded a contract worth as much as $2 million by South Bend’s Board of Public Works to modernize the city’s sewers—a favorite achievement of Buttigieg’s. Four months later, it won an additional $430,000 in city contracts for its work on the system.

Another lobbyist later hired to work on the city’s sewer plan was Thomas New, executive director of government affairs at the Indianapolis law firm Krieg DeVault. New, who had donated $1,500 to Buttigieg’s 2010 treasurer campaign, was later retained by the city to handle federal authorities on the plan.

The Buttigieg campaign has explained in the past that both Queisser and New had been involved in city contract work and municipal politics long before Buttigieg first ran for mayor.

Read more at The Daily Beast.

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