Contractors, local governments eye fallout from HB2

"The city will have to amend some of our contracting requirements as the new law limits the number of protected classes," Raleigh City Attorney Tom McCormick wrote last week.

He was unsure what, if any, impact the new state law would have on minority contracting guidelines because he hadn't finished reviewing the it.

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"There is room for clarification," she said Monday.

In the case of government contracting, there appears to be two ways the law could force local governments to react.

Certain cities and counties have required contractors to adopt broad anti-discrimination employment practices, some of which include specific protections for gay, lesbian and transgender people. But House Bill 2 says that cities may adopt nondiscrimination policies that only address "race, religion, color, national origin, age, biological sex or handicap," a statement that specifically excludes the LBGT community.

Most who have written about this topic say they don't think this provision will affect minority contracting rules.

Of more concern with regard to historically underutilized businesses, or HUBs, is a general prohibition in House Bill 2 from adding additional contracting requirements not specified by state law. While state law currently encourages HUB participation in construction projects costing more than $300,000, some municipalities have extended their HUB contracting programs to bids below that threshold or dealing with non-construction items.

"I think that's an open question," Houston said. "To some degree, it may depend on the extent of the requirement in a HUB program."

Officials with the North Carolina League of Municipalities, the Metro Mayors Coalition and the North Carolina Association of County Commissioners said their member cities and counties have not raised the contracting question with those associations, which lobby at the legislature on behalf of local governments.

But Andrea Harrison, a co-founder and senior fellow for The Institute, a nonprofit management consulting and services firm focused on business diversity, said the minority contracting community is on the lookout for potential problems. She said that lawmakers could act during the short session to clarify minority contracting rules are not part of the "collateral damage" wrought by House Bill 2. Like Houston, Harrison is unsure there will be an effect.

Most HUB program don't require that cities or their contractors hire a particular kind of company. Rather, Harrison said, they merely require that HUBs be included in the contracting conversation, giving both those hiring and those who might perform work a "nudge" to think differently. There is the potential, she said, for some small businesses to lose the help provided by those nudges.

"I would expect is there is some modification as a result of this (HB2) language, we will see some changes that aren't positive for the HUB community," she said.