As Los Angeles Overhauls Procurement, 2028 Olympics Will Provide Major Test

The city hopes to involve minority firms in a big way -- but there are major hurdles it must first overcome.
by | December 18, 2017 AT 5:00 AM
Los Angeles has been selected to host the 2028 Olympic Games. The city plans to use the opportunity to revamp its procurement and contracting approach to involve more small and minority-owned businesses. (AP/Richard Vogel)

This story was produced with support from the City Accelerator program.

For Los Angeles, hosting the Olympics for the third time doesn’t just provide an opportunity to showcase the Southern California metropolis yet again on a world stage. It’s a chance to fix one of the nagging criticisms from the last time the city hosted the games.

The 1984 Olympics were widely considered a big success, namely because they turned a profit and the private sector played a big role in development and planning. But minority firms were largely left out of the picture. Twelve minority-owned firms even sued the Los Angeles Olympic Organizing Committee that year.

Now, as the city is in the midst of major procurement outreach focused on minority and small business involvement, the 2028 Olympics will provide a big test as to whether those reforms are working.

“We can really leverage the opportunity of the Olympics,” says Shmel Graham, director of Mayor Eric Garcetti’s Operations Innovation Team. Even more than 10 years out, she says, “there’s already discussion going on about how to explore and tap into those opportunities.”

When it comes to increasing minority and other small business involvement in city contracting, Los Angeles faces internal and external hurdles. For starters, data is incomplete as some departments are better than others in tracking contracting data. All officials really do have right now, says Graham, is a sense that the numbers “are abysmal.”

Externally, California’s constitution has limits on offering preferential programs for minority groups. Called Proposition 209, the provision was passed in 1996 as part of a backlash against affirmative action policies in education. While much of the focus at the time was on college admissions, the amendment also prohibits California governments from specifically targeting racial groups in new programs. That has made it difficult for cities like Los Angeles to create initiatives that target minority-owned and disadvantaged businesses’ involvement in city procurement.

Officials hope L.A.’s participation in the City Accelerator project, a cohort of cities aiming for comprehensive procurement reform, will help it overcome those two hurdles on the way to reforming its procurement processes. When it comes to working around Prop. 209, the city is working on policies and programs that will target small businesses in general -- not singling out minority firms. It’s similar to a tactic taken by Milwaukee, another City Accelerator cohort barred from using race and gender-specific initiatives in procurement.

“The thought is that many of the small businesses will be minority- and women-owned,” says Graham. “The focus is on creating an environment that will help small businesses not just emerge but keep them growing and thriving.”

To that end, the city is on the verge of announcing a new chief procurement officer who will report directly to the mayor and spearhead Los Angeles’ overhaul. Among the biggest tasks is revamping and standardizing its online procurement platform. Called the Business Assistance Virtual Network (BAVN), it’s currently a dumping ground for contract opportunities in each of the city’s separate departments. It lacks centralization and continuity between agencies, which makes it difficult for small firms with less resources to navigate the ins and outs of different agency contracts. The city has already revamped its network for commodities contracting, and expects to launch its construction contracting site this summer, and professional services contracting by the summer of 2019.

With the new systems, the city hopes to start collecting better data on how it’s doing with minority and small businesses. But there’s another hurdle officials have encountered: many small businesses in the city don’t even know about BAVN and certainly aren’t registered on it. To rectify that, the city is working with business resource centers and minority chambers of commerce throughout the metro area to help them pass on more information about registering in the online marketplace. Officials also plan on hosting matchmaking events across the city where larger, prime contractors can meet with smaller, sub-contractors to connect for future opportunities.

If successful, the procurement overhaul could help many minority firms in L.A. share in the huge pot of money and business opportunities that the 2028 Olympics will bring.

Following the 1984 Games in L.A., the Olympic organizing committee was criticized for encouraging few minority firms to participate in the construction or rehabilitation of any Olympic sites. The image was in stark contrast to the 1996 Games in Atlanta, where officials made a concerted effort to outreach to minority firms. There, black-owned firms scored roughly 40 percent of the dollars awarded for architectural, engineering and construction contracts.

“It transformed Atlanta,” says Rodney Strong, whose firm Griffin & Strong worked with Atlanta to make the city’s purchasing and development more equitable. “There are firms that really went to the next level on the basis of that.”

Strong, whose firm is also working with the City Accelerator program, said L.A. has a long slog ahead of it and much depends on the commitment from the mayor’s office. “If it’s clear you have support from the chief executive, and that person is not going to put up any resistance to centralized authority, and you have a skilled person in the [chief procurement officer] position, it can be done,” he says. “That’s a lot of ‘ifs.’”

Additional reporting by Julian Wyllie. Julian joined Governing as a City Accelerator Fellow. This story was produced with support from the City Accelerator program and the Living Cities Foundation.

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