Portsmouth staff outline MWBE policy after disparity study; council debates penalties, incentives and data gaps

City Manager Carter introduced a proposed minority- and women-owned business enterprise (MWBE) policy Monday, saying the city’s 2023 disparity study showed persistent gaps in how Portsmouth awards contracts and that the policy is intended to increase minority and women business participation in city procurement.

The manager said the 2023 study “revealed that these disparities still persist, particularly in key procurement categories, such as construction and professional services,” and recommended race‑ and gender‑conscious measures and a framework of aspirational goals, compliance monitoring and outreach.

The report and staff presentation did not require council action at the meeting; Carter described the session as an introduction for new council members and said formal approval of a policy would come later. “There’s no action required of you on what we’re providing tonight,” Carter said. “This is really, more so for our new council members, an opportunity to see what it is, hear from the staff as to what it’s all about.”

Why it matters: The disparity study — completed 10 years after an earlier 2013 review — found large differences between the availability of minority firms and the share of city contract dollars they receive. Staff pointed to examples used in the study: African‑American firms received roughly 0.66% of construction dollars in one cited analysis while non‑minority firms received about 89.58% of construction dollars, figures staff said underscore “the critical need” for a documented policy to ensure fair access to city contracts.

What the policy would do: Staff described five pillars including aspirational participation goals (nonbinding targets of 10% minority participation in construction and 15% in professional services, among other category targets), a certification approach that relies on existing certifying agencies (for example, the U.S. Small Business Administration or state certifiers), a monitoring and auditing regime for contract reporting, and a process for contractors to demonstrate a good‑faith outreach effort.

On enforcement and damages: Council members pressed staff on the policy’s penalty language. The city attorney explained the policy would rely on liquidated damages tailored to the contract and market, not punitive damages, because punitive damages “are not appropriate for these kinds of provisions” and would likely be rejected by a court. The attorney described the liquidated damages proposal as a range with formulas to fit small purchases through large contracts and said contract language will be negotiated case by case.

Data, reporting and capacity building: Several council members and staff highlighted gaps in the data used for the disparity study and the need to collect subcontractor dollars and past‑performance information going forward. Carter and staff said the city will hire a MWBE coordinator or manager to run the office, lead outreach and education, and compile compliance reports. The manager told council the office will produce regular public reports — at least semiannual, with more frequent internal monitoring tied to payment requests — and that the city will require contractors to submit minority participation data that can be audited.

Training and incentives: Council members urged that the policy pair accountability with capacity building. Councilman Dunne and others asked whether staff are addressing upstream barriers — for example, helping firms learn how to bid, to qualify, and to meet bonding and insurance requirements — and staff said the new MWBE manager’s job will include community outreach and skills training. Members also debated incentives versus penalties; some urged exploring incentive language or extra scoring points for proposals that include MWBE participation, while staff said the state’s procurement framework already incorporates some incentive mechanisms and that incentives warrant further study.

Related programs and local steps: Council members described existing local efforts they said support the policy, including economic development start‑up grants and a new Emerging Developers Group run with Local Initiatives Support Corporation (LISC) and the Economic Development Authority to build capacity among minority developers. A council speaker said the EDA had committed a $50,000 seed and the program expects to recruit a cohort of applicants for training beginning in March.

Next steps and timing: Staff said they will circulate the full disparity study and a draft policy for council review, seek council buy‑in, and bring a final policy for approval later. Carter said the city expects to staff the MWBE office and have operational pieces in place in about 90 days.