Chicago’s construction set-aside program extended for six years with revised eligibility standards

Acting Procurement Services Commissioner Monica Jimenez said the relaxed eligibility standards will open the door for more minority- and women-owned firms to enter the marketplace and prosper.

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Rich Hein/Sun-Times file

Chicago’s construction set-aside program for minorities and women will remain in place until December 2027 — with revised eligibility requirements that broaden the umbrella — thanks to a six-year extension advanced Friday.

Armed with a new “disparity study” mandated by a federal judge, the Chicago City Council’s Committee on Contracting Oversight and Equity agreed to extend one of the last surviving construction set-aside programs in the country but keep the set-aide percentages the same.

Through December 2027, the city will earmark 26% of all construction contracts for companies owned by minorities and 6% of those contracts for firms controlled by women.

“It’s not everything that everyone wants, and we definitely want it to be more. We want the limits to be higher. We want the percentages to go up,” said Ald. Jason Ervin (28th), chairman of the City Council’s Black Caucus.

“But we definitely thank [consultant Collette] Holt for the work that she’s done in laying out a path for us that is not only defensible but almost a guarantee. It gives us the best leverage possible to keep the program and keep growing small minority- and women-owned businesses.”

Ald. Gilbert Villegas (36th), chairman of the Hispanic Caucus, said he would like to “go a little bit further.” But Villegas said he was satisfied with the “baby steps” proposed by the mayor.

Those revised eligibility requirements include:

• Allowing minority-and women-owned companies to qualify for the program until they reach 150% of the size standard established by the U.S. Small Business Administration.

• Averaging gross receipts over a seven-year period, instead of five years.

• Narrowing factors used to calculate personal net worth by eliminating non-liquid assets that include real estate, retirement savings and the owner’s interest in non-certified businesses.

“Lifting the caps a little bit more and also gross receipts [gives] minority-and women-owned businesses the ability to compete as primes, which is what we all want - to see more … [of these] firms at the prime level, which in turn hire other minority-and women-owned businesses,” Villegas said.

Villegas initially proposed raising the caps on personal net worth to $10 million and on gross receipts to $100 million. After reviewing five years of minority contracting and sub-contracting by the city, Villegas said Holt essentially told him, “maybe we can do that another time.”

Ald. Sophia King (4th), chairwoman of the Progressive Caucus, said she, too, “thinks we should increase our numbers.”

“Because of the ‘but for’ clause, because of the discrimination, African American firms particularly haven’t been able to grow. In fact, I think the numbers would show that they’ve decreased,” King said.

“My experience has been, not that there’s not availability, but that majority firms are choosing to go to the suburbs and hire people that they know and have had consistent relationships with. That there is availability, but they’re just not being considered.”

Acting Procurement Services Commissioner Monica Jimenez said the relaxed eligibility standards will “better reflect the financial challenges that small business owners face.”

That will open the door for “more minority and women-owned firms to enter the marketplace, grow and prosper, she said.

The new eligibility requirements were recommended by minority contracting consultant Colette Holt, whose “disparity study” found “ample evidence that race or gender continue to significantly impede full and fair opportunities” for minorities and women seeking city construction contracts.

“Stereotypes, biased perceptions, assumptions of incompetency and outright hostile work environments remain all too common. Industry networks remain closed to [minority- and women-owned businesses]. Prime contractors that use [minority- and women-owned businesses] to meet government affirmative action goals rarely even solicit them to bid on non-goals work,” the summary states.

“The city’s program remains critical to the success and often even the existence of these firms. Without the affirmative remedial intervention, it is likely the city would become a passive participant in the market failure of discrimination.”

Without a six-year extension, the construction set-aside program will sunset at the end of the month The full City Council is expected to approve the extension.

Earlier this month, indicted Ald. Carrie Austin (34th) resigned as chairwoman of the Committee on Contracting Oversight and Equity after Lightfoot demanded it.

On Friday, Austin led the charge in urging her colleagues to support the six-year extension.

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