Big Ideas for Small Business: Comments CSB presentation
City of Cleveland
Helping Small Businesses Get a Share in Procurement and Incentive
Mayor Frank Jackson strongly believes in “Self-Help” and convened a large number
of large businesses and institutions in 2008 to ask that we set a collective goal to
increase our “spend” by $2 billion in our purchasing, locally.
Cleveland had a “race- based” procurement policy for many years. When challenges
to this system were raised nationally, Cleveland undertook a Disparity study which
was completed in 2007. The study showed a Disparity (i.e. contract dollars were
awarded were far less than what would be expected due to the number of available
contractors) only in Vertical Construction projects. A new disparity study is
underway in Cleveland at this time.
At that time (2008), the Mayor extended procurement policies to add Certified
Small Businesses. The definition for Certified Small Businesses are companies in
the County- in this case, Cuyahoga County, which is our contracting area. This is
directly related to the Mayor’s understanding of the “regional economy”. The
program is defined under Chapter 187 of the City’s codified ordinances
These incentives provide mandated participation and bid discounts, allowing a
bigger share of Cleveland’s procurement, Community Development construction
contracts and Economic Development incentive contracts which include
construction for horizontal construction, vertical construction and service contracts,
to be awarded to local small businesses.
The Office of Equal Opportunity, under Chief Natoya Walker-Minor, certifies these
businesses, assists departments with pre-bidding and pre-construction conferences
and tracks the actual hours and dollars of subcontracting. They have a staff of 15,
however, other large departments have their own compliance staff, including
Utilities, Public Works and the Airport.
Currently the subcontracting goals are:
Vertical Construction (where the only disparity remains in Cleveland’s
• 15% Minority Owned Business
• 7% Female Owned Business
• 8 % Certified Small Business
• 30% Certified Small Business
In 2010, the City reduced the amount of City funding under which Chapter 188
applies to $10,000 or more from the original $100,000. There were many contracts
in Community Development and Economic Development that were under $100,000
and the OEO staff believed these may provide more opportunities to small
Also in 2010, in response to committees that started through the Mayor’s
Sustainable Cleveland 2019 efforts, the City added “Local Producer/Sustainable
Business” policies (Chapter 187A of the City’s codified ordinances). These policies
add 2% bid discounts (Contracts requiring bids) and 2% evaluation credits
(consultants contracts). These bid discounts or evaluation credits can be combined
with MBE, FBE and CSB incentives for a total of up to 9%. The three areas for bid
• Covers a 5-county region for companies that fabricate, process or
supply goods and services
• Cover companies located in a 15-county region for food growers or food
• Eligible Businesses with sustainable practices are headquartered in
a 5-county area
• Must be certified by one of two agencies
o Green Plus
o E4S, Green City Certification Program
Local Food Purchaser
• A company who buys at least 20% of food per contract from within
Cleveland Resident Employment Law
The City goes further by having a law (commonly called the Fannie Lewis Law after
the Councilwoman who worked on the legislation; Chapter 188 of the City of
Cleveland Codified Ordinances) requiring 20% of all construction hours under City
bid contracts and City incentive contracts of $100,000 or more to go to Cleveland
residents. Of those hours, 4%, or .8% of all construction hours, must go to “Low
Income” Cleveland residents as defined by HUD. There are penalties for failing to
make best efforts under this law, however they are relatively small and some
businesses opt to pay the penalty. This is especially the case for Union contracts,
where hiring a “low income person” is impossible under the terms of the Union
contract which bans non-members on the job site. The City is looking at stiffer
2007 Disparity contract only included “prime contracts”- no loan contracts were
included. The new study (being conducted at this time) will include ED Loan
The original approval data frequently was not the final mix of subcontractors
working on the project. So original approval documents were not the sole source of
information. Reporting documents were also used. A survey of prime contractors
was also used. The difference between subcontractor reporting between the original
approval document and all subsequent reporting was great (Table 1.07)
Vertical construction includes construction of residential, industrial, commercial, or
other buildings; building renovation; and special trades typically performed on
buildings or building-related projects such as painting, electrical work, carpentry
work, plumbing, heating, air-conditioning, roofing, and sheet metal work.
Horizontal construction includes bridges, highways, streets, sewers, landscaping,
and irrigation projects. Architecture and engineering services included construction
related professional services, such as architectural, engineering and construction
Chart 1.01 shows the clear disparity for African American businesses in Vertical
Results from the 2007 study contain the following recommendations,
which the City has implemented or is currently implementing (software
In order to determine the availability of businesses to perform the specific items of
work, the City will need to maintain a current database which identifies available
African American and non-African American firms.
The City’s data collection process needs to be enhanced. The following
recommendations are presented as strategies to enhance the City’s collection and
maintenance of subcontracting data.
• Modify the City’s prime contractor and subcontractor tracking process
to ensure subcontractor utilization records are collected and
maintained throughout the duration of the contract on all construction,
architecture and engineering, and professional services contracts.
• Strictly enforce Cleveland City Code 181.37, which requires all
subcontractor substitutions to be approved by the Board of Control
prior to the subcontractor being replaced. This will ensure that all
subcontractors are listed on Board of Control Resolution amendments.
• Cleveland City Code 181.37 should be amended to establish a penalty
for prime contractors that fail to list all subcontractors in their bids,
proposals, and qualification statements for review and approval by the
Board of Control at the time of contract award.
• Strictly enforce and monitor Cleveland City Code 188.04 to ensure that
prime contractors and subcontractors submit certified payroll reports.
The City should manage these documents electronically, and the prime
contractors should be required to submit an electronic file.
• Cleveland City Code 187.03 should be amended to explicitly state that
the bidder must submit executed agreements with MBE/FBEs listed in
their bids, proposals, and statements of qualifications. The executed
agreements must be received before the release of the prime
contractor’s first payment.
• Cleveland City Code Chapter 187 should be amended to require a
signature from the Office of Economic Opportunity (OEO) before the
execution of a contract. This will ensure the OEO provides the
necessary review for contract compliance and receives a complete
• The City’s first payment to prime contractors should not be released
until all required documents, such as Schedule 6 records and
subcontractor contracts, have been submitted by the prime contractor.
• Board of Control Resolutions amendments should be prepared to
reflect changes in listed subcontractors.
• In addition to increasing the enforcement of its codes and ordinances,
the City should implement penalties for prime contractor non-
compliance with its document submission requirements.
• The City should include a clear statement of the reporting
requirements and payments on its website.
The disk provided includes the following resources that would provide more
information and contact people to gain more information on establishing legislation,
implementing a program and the results. They include:
• Background for Legislative changes adding certified small
businesses- information on why this was added
• Increased Small Business Participation Numbers-powerpoint slide
showing the increase in participation due to the program.
• Local_Purch_Presentation_CWRU DRAFT SJ- Powerpoint that explains
the Local Purchaser program
• LPE-SUBE Speaking Points 1-2012- Talking points on the Local
Purchaser Legislation and program
• OEO-187CABCode-NoticetoBiddersandSchedules-1-27-10- Information
to bidders on Minority, Female and Certified Small Business Participation
• OEO-NoticetoBidders01-10-11 (3) – Information and forms to bidders on
Cleveland Resident Employment Law
• Office of Equal Opportunity Mission Purpose Process 2_2012- A
powerpoint summary of the programs, compliance and outcomes
• Resources for City of Cleveland Equal Opportunity Policy and
Process- Contact information for the Office of Equal Opportunity and Law
Department to discuss these programs and their implementation
• SubcontractorDisparityAnalysis Summary- A Summary of the Disparity
Study. For the entire Study, go to the City of Cleveland’s website under
Departments, Office of Equal Opportunity www.city.cleveland.oh.us
• The two laws are called Chapter 187 and Chapter 188 of the City of
Cleveland Codified Ordinances and are on the disk provided.