Grand Rapids staff propose pilot to raise MLBE bid-discount cap to boost local contractor participation

City staff on the commission dais presented proposed updates to the citys equal-business-opportunity programs designed to increase use of certified micro and local business enterprises.

Mister Davis of the Office of Equity and Engagement introduced the briefing and said staff intend the updates to align city commission policy language (policy 600-12 and 600-15) with administrative policy 04-01 (MLBE certification). "Wewant to be more in alignment with neighborhoods of focus and current census-tract data," Davis said.

Alvin Hills, who led the policy details, said the package includes two new bid-discount categories for construction and for goods/services: a 2% maximum discount for externally certified employee-owned businesses (2% Kent County; 1% state-level) and a 1% discount for participants in the Friends of Grand Rapids Parks urban/community forestry program. Hills said an administrative-guideline update to 600-12 would also refine language and expand geographic focus to "neighborhoods of focus."

The centerpiece is a proposed three-year pilot to increase the bid-discount cap from 5% (capped at $100,000) to 10% (capped at $200,000) for specified qualifying categories, with staff collecting performance data during the pilot. "Eligible categories and efforts to utilize that 10% increase are really designed toward MLBE subcontractor engagement, mentor-prote agreements and joint-venture opportunities," Hills said.

Staff cited 2024 contracting data used to justify the pilot: seven projects (14%) could have "flipped" to an MLBE-involved bidder with higher discounts, 13 projects were unaffected, 21 projects showed potential but were not utilized, and 10 projects (20%) were ineligible. Hills said the intent is to increase MLBE utilization and grow the supplier base rather than to close markets to outside contractors.

To help smaller prime contractors, staff proposed a growth-market MLBE discount for prequalified prime contractors under $250,000: work valued $25,000 to $75,000 would receive a 6% discount under the pilot, up from the current 3%, to create opportunities for smaller prequalified firms.

On certification, staff proposed raising the personal-net-worth cap from $305,000 to $375,000 (adjusted for inflation from the original $250,000), requiring personal-net-worth statements signed by a licensed CPA to align with federal 8(a) standards, and limiting certification-extension requests to two beyond the initial nine-year certification period.

Commissioners asked for clarifications on employee-owned certification, neighborhood-of-focus criteria, CPA cost burdens and mentor-prote verification. Hills said employee-owned discounts would require certification by an external agency that meets ESOP criteria, and the city has a partnership with Hawkins CPA to underwrite $500 of CPA support for applicants. On mentor-protege and joint-venture agreements, Hills said the Office of Equity and Engagement must approve agreements and follow up with subcontractors to verify a one-year mentoring commitment before an approval letter is issued.

A commissioner cautioned that raising discount percentages could encourage retaliatory local incentives between jurisdictions; Hills answered that the program is open to businesses nationwide and that outside primes can use the discount when they subcontract to certified MLBEs.

Next steps: staff said the revisions have been vetted with the Monday Group of local contractors and developers and will return for further approval; staff also plan broad outreach to the business community if the commission signs off. The commission did not take a formal vote on the package during this meeting.