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City attorney outlines MWBE changes: higher threshold, post-award accountability and financial remedies
Summary
Assistant City Attorney Michael Schmidt proposed raising the MWBE threshold from $50,000 to $150,000 where state rules permit, shifting some compliance to post-award verification and adding contractual monetary remedies for missed goals, with a continued good-faith waiver process.
Michael Schmidt, assistant city attorney, told the South Bend Common Council on April 27 that staff is proposing targeted changes to the city's Minority and Women Business Enterprise (MWBE) program plan intended to increase small-contractor opportunities and strengthen post-award accountability.
Schmidt outlined three principal changes: raising the dollar threshold that triggers MWBE goals on projects (raising the point at which goals are required from $50,000 to $150,000 where state quoting rules allow), changing how bidders document their subcontractor plans (with verification focused after award rather than as a strict precondition), and adding contractual remedies if a prime contractor fails to meet the MWBE participation goals at project completion. "If you missed by 1% on the M and 1% on the W,' there's going to be a contractual provision that says your damages were not fulfilling the contract ... you're going to pay that percentile back to the city," Schmidt said.
Schmidt said recovered funds would be targeted to the Office of Diversity and Inclusion (ODI) for additional education, outreach and certification programs. He also said the proposed changes would retain the current good-faith-effort waiver process; contractors that cannot meet goals can seek a waiver, which the office will review.
Council members asked how the change would affect smaller firms and whether it would actually expand opportunities. Schmidt said increasing the threshold would allow the city to solicit targeted quotes at higher dollar levels (the state now allows some quote flexibility at $150,000), which could let smaller contractors compete for full projects rather than just being subcontractors. "This kind of makes sense," he said, adding that the city hopes the approach will increase competition and reduce costs while enabling accountability at project close.
No ordinance or formal vote was taken on the MWBE program plan during the meeting; the presentation was informational and council members signaled support for continued refinement and outreach.
