ECONOMIC DEVELOPMENT: Minority Participation in Construction Of Atlanta Airport

By Dave Miller and Gordon Kenna

Vol. 1, No. 2, 1978, pp. 24-25

Contracting opportunities for minority-owned businesses have been the subject of much attention of late, but the methods of achieving minority business participation are not so well known. Certainly, this is a new endeavor for both contractors and purchasing departmentswhich is often bound by law and tradition to do business using conservative and often unimaginative methods. But given a genuine desire and commitment to encourage minority business participation, affirmative action goals can be reached and even exceeded within the principles of sound business management and bidding practices.

One such successful program has been implemented by the City of Atlanta in the construction of the new terminal building for the HartsfieldAtlanta International Airport. At the direction of Atlanta Mayor Maynard Jackson, three goals were established for the Airport Terminal Construction Program: (1) completion by a certain date; (2) completion within budget and; (3) significant involvement of small and minority business enterprise.

The last goal envisioned a role considerably more encompassing than the conventional Equal Employment Opportunity standards commonly applied to construction programs of a large scale nature. Equal Employment Opportunity/Affirmative Action Programs in the past affected the composition of the staffs of the prime contractor and the sub-contractor, but not necessarily the ownership of the contracting firms. In those EEO/AA matters, Atlanta's "Hometown and Federal Plans" applied, however, it was in the area of ownership that the City wished to develop contracting procedures to increase the opportunities of small and minority firms to participate. Minority firms are those in which at least 50 percent of the ownership is held by persons who are defined by the United States Equal Opportunity Commission as minorities.

Atlanta has enjoyed tremendous success with each goal; the project is on time, is within budget and has afforded and fostered impressive minority involvement figures. The project averages 26 percent minority business participation of the $200 million in contracts to date. There are 96 individual contracts awarded to minority firms, 43 supply/vendors, 51 sub-contracts and two minority firms as primes. Minority Employment averages 43 percent of the present construction work force of 1500.

As a first step towards acheiving the cooperation and understanding of all parties, firms interested in bidding were required to complete a thorough prequalification process. Only firms that successfully prequalified were permitted to bid. Initially there was some misunderstanding of what was required in the prequalification process but soon it became clear that this procedure was helpful to the City, contractors, sub-contractors and the airlines.

By requiring firms to prequalify, the City can assure that all bidders are capable of doing the work, and understand the conditions and requirements of the job, especially with respect to the goals of minority business utilization.

To achieve Atlanta's multiple goals it was required that the prime contractors (for each individual contract), (a) develop a comprehensive organizational structure and (b) award subcontracts on a competitive basis. At the same time the prime contractor was to consider and utilize as appropriate, a variety of special arrangements designed to foster equal opportunities for small and minority business enterprise participation.

CITY ACTIVITIES

To assist the prime contractor in achieving the City's expectations, the City agreed to (a) monthly or semimonthly payments to the prime contractor so that it could meet any critical cash flow needs of its subcontractors, and (b) reimburse the prime contractor for bulk purchases of materials and equipment (which was properly received and satisfactorily stored) at the succeeding monthly or semi-monthly payment.

At the request of the prime contractor, the City, when necessary, agreed to assist in efforts to obtain from outside sources the desired assistance to small and minority business enterprises if such was required to strengthen the management expertise of such firms to manage and carry out the terms of their contracts.

The City utilized the services of its engineering joint venture to (1) assist the City's Contract Compliance Office in monitoring compliance with EEO/AA and small minority business enterprise programs; (2) breakdown contracts in smaller work elements and; (3) provide suggestions to the City on ways to further the technical and managerial expertise of small and minority firms.


Page 25

Atlanta also established an advisory committee to assist in reviewing the continuing program of the prime contractor and sub-contractors concerned with EEO/AA compliance and small and minority business enterprises participation and made recommendations to the City concerning such performance. This group acted in an advisory capacity only to the City and included representatives of the City, the airline industry, the prime contractor, a trade association, and two (2) representatives of private non-profit organizations concerned with minority employment and business participation.

In summary, the results of the above special arrangements between the City, prospective contractors and subcontractors are a program (1) that is successful; (2) that exceeds initial expectations in terms of depth and; (3) is now being considered as a model for future large scale construction projects throughout the United States. Of particular interest are the results of a study recently released by the Federal Aviation Administration's Airport Development Aid Program (ADAP). This study dramatically underscores Atlanta's success in giving minority enterprises a fair share of the work and benefits created by this project. Of the $330.4 million in construction project at 27 major airports in the United States with Federal participation, $56.3 million have gone to minority firms. Of this $56.3 million, $52 million has been awarded to minority firms participating in the Atlanta Hartsfield Airport Expansion Program. Nearly 89 percent of all dollars of federally assisted construction programs at those major airports going to minority firms were contracted through the City of Atlanta. These figures demonstrate the City's administration, Atlanta airlines, and the prime contractors commitment to affirmative action programs, and prove that minority participation goals can be reached in a business-like manner.