Jane Larson, The Arizona Republic

The Arizona Republic

Copyright 1999 Phoenix Newspapers, Inc.

Wednesday, May 5, 1999

Business

SMALL BUSINESS

Minority business owners reacted positively, with a few suggestions for improvements, to last week's study that said the city of Phoenix needs to do more business with minority- and female-owned companies.

At a public hearing Thursday night, representatives of the Greater Phoenix Black Chamber of Commerce, the Arizona Hispanic Chamber of Commerce, the Arizona American Indian Chamber of Commerce and the National Association of Minority Contractors said they were alarmed at and disturbed by the findings that the city had been a passive participant in continued bias in city contracting. And they endorsed the study's recommendation that the city's programs to fight such discrimination continue.

The study found that the city had made progress in reducing discrimination in its purchases of goods and services, but that disparity still exists between the percentage of minority- and female-owned businesses in the marketplace and the percentage of city purchases made from them.

Minority business owners often hear non-minorities say things should be equal, instead of their companies getting preferential treatment, said Denise Meredith, president of the Black chamber. But

if, as the study says, African-American companies are getting less than 1 percent of city work, "there is no question the programs should be continued and strengthened," she said.

Frank Rivera of the minority contractors group noted that he, too, hears complaints that such programs interfere with basic competition. "But when a certain group is getting 98 percent of the work, where is the competition?" he asked.

To remedy the situation, the study recommends some significant changes in the city programs, said Brad Holm of Gallagher & Kennedy, the law firm representing the city. They include setting specific goals for contracts with each ethnic group, elimination of a loophole that allowed prime contractors to "bid shop" for 24 hours after they won a contract, and the establishment of a Small Business Enterprise

program open to entrepreneurs regardless of race or gender.

Minority business owners also urged the city to consider adding teeth to its programs. For example, the city should ensure that big contractors pay their small subcontractors in a timely manner, Mike Simpson of Simpson Contracting said.

Other owners urged that consultants and professional services be included in the programs, and that something be done about the solicitations they constantly get to bid on jobs that are way out of their reach.

The recommendations next go to the Phoenix City Council's Economy, Downtown and Sports subcommittee May 11 and to the full council May 12. If approved, the new programs would start July 1.

Keith Snider

The Tennessean

Gannett News Service

Copyright 1999

Monday, May 3, 1999

NASHVILLE, Tenn. -- The National Black Chamber of Commerce is taking a campaign for minority representation to Columbia/HCA Healthcare Corp. and others in a $1 trillion health-care industry that the chamber says has been slow to include African Americans as leaders and contractors.

While the chamber has targeted Columbia/HCA first, officials said they will broaden the effort to all health-care companies by the end of the year.

The chamber, the largest economic organization dedicated to black businesses, said it wants Columbia/HCA and other companies to appoint more African Americans to corporate boards and to use more black-owned businesses as suppliers.

The organization said Nashville-based Columbia/HCA has been slow to respond to minority concerns in the past but muted its criticism by saying it thinks company officials now are better aware of its concerns.

"What we're trying to do is bring diversity into the health-care industry," said Harry C. Alford, president and chief executive officer of the chamber. "We picked them to be the leader."

Columbia/HCA defended its record, saying it spent more than $50 million last year with minority-owned suppliers -- a category that includes firms controlled by various ethnic minorities and by women.

The company spends about $2.9 billion annually for supplies.

Darrel M. Mogilles, who heads Columbia/HCA's vendor diversity program, said most new contracts last year went to businesses owned by African Americans.

He said he'll meet with African-American business leaders in Washington this week to explain the hospital company's programs.

Columbia/HCA, which now contacts suppliers through the National Minority Supplier Development Council, also will begin using a database from the black chamber, according to Mogilles.

Meanwhile, Columbia/HCA has begun a broader effort to increase diversity among its work force and on community hospital boards, said Alan Yuspeh, senior vice president for ethics, compliance and corporate responsibility.

Columbia/HCA declined to release its figures on minority hiring.

"My intuition is we have a diverse work force by any measure," said Yuspeh, who said the initiative is in its early stages. "We think we start with a solid foundation."

By some estimates, minority firms get only about 1 percent of the $900 billion in supplier contracts up for grabs in the U.S. economy.

"This is a business issue," Alford said.

With 260,000 employees, Columbia/HCA is the 10th largest company in the nation and the largest for-profit hospital business, putting it in a unique position to possibly influence the hiring and spending

patterns of competitors.

Tenet Healthcare Corp., the second largest hospital company, said it hadn't been contacted by the chamber and isn't aware of its campaign.

Even without the initiative, health-care companies have become more sensitive to minority concerns, said Tom Scully of the Federation of American Health Systems, which invited dozens of minority suppliers to its conference last week in Orlando.

But the chamber said health care lags behind automakers and telecommunications companies in using minority contractors.

"They're totally out to lunch, and many times very arrogant," Alford said.

The chamber said health-care companies, which get payments from Medicare and Medicaid programs, are covered by a provision of the U.S. Civil Rights Act that requires businesses receiving government funds not to discriminate against minorities.

The provision has not been tested with regard to health care, and most companies aren't aware it exists, said Margaret Rush, who heads the South Carolina Black Chamber of Commerce and is chairing the national chamber's health-care initiative. "It's a well-kept secret," she said.

She said the chamber prefers to make its arguments in the board room rather than the courtroom but will test the law if necessary.

"What I would say to them is, 'You don't have to hit us over the head with a law book to get us to do the right thing,"' said Yuspeh, who said Columbia/HCA is in compliance with the law.

With the emergence of national health-care companies, the issue of minority contractors simultaneously has become more critical and more difficult, industry officials said.

Public companies must balance the need for diversity with their fiduciary responsibility to shareholders, said analyst Jeffrey Villwock of Robinson-Humphrey in Atlanta.

"You have to have a qualified supplier, but then you have a responsibility to use those suppliers," he said.

It's often difficult for health-care companies to find minority firms for specialized supplies such as orthopedic equipment, Mogilles said, adding that small suppliers often get elbowed out of national contracts, which make up 65 percent of his company's procurement spending.

To counter that problem, Columbia/HCA has begun to carve out parts of contracts so the little guys can get a piece of the action. For example, a company might bid on only one kind of surgical instrument in a contract that might include 15 types of surgical trays.

It's more cumbersome, but worth the effort, Mogilles said.

"I like to say we're cultivating some big hits. If we cultivate some business at that level, somebody can get in the door. If you don't do some creative things like that, you'll never get any gains."

Susan G. Strother

KRTBN Knight-Ridder Tribune Business News: The Orlando Sentinel - Florida

Copyright (C) 1999 KRTBN Knight Ridder Tribune Business News; Source: World

Reporter (TM)

Monday, April 26, 1999

MINORITY CERTIFICATION CAN BE WORTH ANY HASSLE: When Mickey Mouse breaks a heel, he turns to Jose Henao and Luis Restrepo.

The two men, owners of Professional Shoe Repair in Altamonte Springs, spend a good chunk of their time fixing shoes for dancers and other performers at Walt Disney World.

But the business didn't just land on their front counter – and Disney, surely, could have found a repair shop closer than Altamonte Mall.

Professional Shoe won the $25,000-a-year Disney contract, in large part, because its owners took the time to become certified as minority contractors.

Certification is virtually the only way for government and large companies to verify that vendors claiming to be minority- or female-owned truly are. Business owners who become certified have a leg up when competing for contracts reserved for minority- or female-owned companies.

That can mean a lot of money. Orange County has a goal of allocating 24 percent of its contracts – or $120 million last year – to minorities and women.

The state of Florida spent $225 million in 1998 with state-certified minority vendors, said Hector Delao, a consultant in the Minority Business Advocacy & Assistance Office in Tallahassee.

Delao was in Orlando at the recent Hispanic Business Expo, helping 40 minority contractors complete their certification.

"This helps level the playing field," Delao said.

But ask minority contractors, and they'll tell you that the certification process is not foolproof. Government has been scammed in the past when businesses claiming to be controlled by minorities were not.

And an even bigger problem, some vendors say, is keeping legitimate companies interested in the process. Certification can be such a hassle that some small businesses don't even bother.

Typically, the process takes weeks or even months. For state certification, business owners can expect to stare down a 15-page application that asks about virtually every aspect of the operation – from a list of investors and their contributions to details of any ownership and operating changes in the past year.

There also is a long list of supporting documents to supply, including tax returns, insurance policies and recent contracts.

More vexing is that there isn't much in the way of cooperative arrangements among government agencies. As a result, businesses must be certified in every county or city where they bid for jobs.

The state hopes to ease the burden soon. It has been working for almost two years on reciprocal arrangements with local government so that state certification will be honored on the local level.

In Central Florida, Seminole County has signed on and Orange County is expected to join in the near future, said Veronica Anderson, executive director of the state's minority business office.

The cooperative arrangements are in place with local community colleges and the University of Central Florida and the Orange County School Board.

Small-business owners also should know that there are private groups, such as the National Minority Supplier Development Council of Florida, that work with businesses.

The council's local chapter has certified more than 250 businesses in Central Florida. Nationally, the council's 38 chapters have certified more than 15,000 companies, said Malik Ali, executive director.

The certification helped those companies get work with 3,600 corporations nationwide that were looking for minority contractors.

In the end, business owners who take the trouble to become certified are often happy they did. At least that's the story at Professional Shoe Repair.

Its owners became certified by the state after attending workshops at the Hispanic Business Initiative Fund in Orlando.

Some months later, when a Disney representative called the Hispanic fund looking for a shoe company, Professional Shoe was put on a short list.

The company got the contract after several interviews and supplying samples of its work.

Certification "gives you better opportunities," said Henao, who soon will move to a larger shop across State Road 436 from the mall.

And that's no small endorsement – coming, as it does, from Mickey's cobbler.

Lornet Turnbull Dispatch Staff Reporter

The Columbus Dispatch

Copyright 1999

Friday, April 16, 1999

NEWS

Watching prisoners gather in the yard of the old Buckeye Youth Center more than a decade ago, Pamela Foster-Grear was struck by a business opportunity.

It was right in front of her, on the backs and feet of the young offenders.

"They were all wearing the same thing," recalled Foster-Grear, then a computer instructor at the center. "I realized it wasn't just the outerwear, but everything they wore was the same. And it was all provided by the state."

The state had to buy its supplies somewhere. Why not from her?

She quickly found out: Large East Coast distributors had sewn up the prison-garb market, locking out competition.

The business she formed, Foster Corp., got a foothold in the market by tapping a 15 percent pot that Ohio had set aside for minority-owned companies.

"It forced them to deal with me," she said.

But now, the preference-based program and dozens like it nationwide have come under attack.

Three years ago, California became the first state to ban race and gender considerations in every area -- from college admissions to hiring -- with voter passage of Proposition 209.

Voters in Washington state followed suit last year.

In Texas, lawsuits have forced the state to scale back race-based contract awards and to end preferences for minorities and women in college admissions.

And in Ohio, conflicting court rulings have clouded the future of the state's and Columbus' set-aside laws, which helped Foster-Grear and others get their businesses off the ground.

Against the backdrop of judicial disagreement, legislation has been introduced in both the Ohio House and Senate to replace race- based affirmative-action programs with systems based solely on economic need.

"They don't want any remnants of this program anywhere in the state," said state Sen. Ben Espy of Columbus, minority leader.

Under the Minority Business Enterprise program, the state set goals of awarding 15 percent of goods-and-services contracts, 5 percent of construction contracts and 7 percent of construction subcontracts to companies with at least 51 percent minority ownership.

In the fall, U.S. District Court Judge James L. Graham of Columbus struck down the construction portion of the law as unconstitutional.

To avoid liability, the state suspended the entire program.

Last week, in a different case, the Ohio Supreme Court unanimously found the entire program constitutional. To avoid a conflict with Graham's ruling, however, the justices limited their decision to the goods-and-services provision of the law.

The state has since reinstated that portion of the program, and officials are seeking a stay of Graham's ruling on construction contracts while challenging his decision in the 6th U.S. Circuit Court of Appeals in Cincinnati.

Complicating matters even more, the appeals court last month found that Graham overstepped his jurisdiction in 1993 when he struck down the city of Columbus' set-aside program for the second time.

Columbus has since replaced that program with one that gives preference based on economic need rather than race and sex – similar to what state lawmakers are proposing. Last month's ruling, however, leaves the city free to reconsider its original program.

Graham said the Ohio and Columbus laws failed the test the U.S. Supreme Court set in the landmark Richmond vs. Croson case, requiring state and local governments to prove discrimination in order to justify affirmative action. And he's now requesting statistical data the Supreme Court justices used to uphold part of the state set-aside law.

"The best I could do was to take the rules of the (U.S.) Supreme Court and apply it to this case," the judge said in an interview before the appeals court rulings.

"There are no time limits . . . no sunset. It's a permanent preference to one race and permanent disadvantage to another."

Foster-Grear and some other black entrepreneurs disagree with Graham.

With black-owned companies representing more than three-fourths of the minority firms registered to do business with the state, they believe that in the end, blacks will be hurt the most.

"Discrimination is still very much evident in the marketplace whenever many minority businesses try to borrow money or get a bond," said Robert E. Saffold, president of the Ohio Minority Contractors Association.

"We still don't have the same kind of access. We don't go to the same barbershops or the same country clubs, and we're not part of the good-old-boy network. How do you measure that? All we have to go on is history."

Frustration and resentment pour from both sides of this growing national debate: Is affirmative action a hand up or a handout?

Critics say the programs, fraught with abuse, have missed their mark, failed to level the playing field and become no more than tools of reverse discrimination.

Are preference programs valid?

Years ago, Columbus architect Larry Robinson worked tirelessly to defeat affirmative-action programs.

"The thing that is trumpeted by every minority is that they want to be recognized for who they are and for their merit or talent," said Robinson, who is white. "But they never want these programs to go away. You can't have it both ways."

Many black business owners, however, say that racism still exists in central Ohio. And without governmental mandates, they say, decision-makers will find it easier to overlook black-owned companies in favor of their white friends and country-club buddies.

"It will be back to business as usual: 'You're in my club; you've got my business,' " said Foster-Grear, whose Columbus company today sells a variety of products, including prisonwear, uniforms and safety gear. About a quarter of her business comes from the state.

"The day we start with the same resources and on the same level field is the day we won't need any of that. But that's not inevitable. It's not going to happen."

Nikolai Lindsay's company, Communications Design Group, sells two-way Motorola radios to the government and private companies. White companies, he said, have long had contract work set aside for them under a system known as the "good-old-boy network."

He believes the push to end set-aside programs is fueled solely by greed.

"Minorities have been taxed but not able to participate effectively until these programs were implemented."

Now, as a new century approaches and the nation becomes more racially diverse, anxiety grows over how the country will resolve such divisive issues.

"Is a small minority firm any more disadvantaged than a small firm established by anyone else?" asked Donn G. Ellerbrock, vice president of governmental affairs with the Associated General Contractors of Ohio. His group filed the lawsuits that led to the demise of set- asides for Columbus and the state.

"In the public sector, contractors have always competed freely, and I think many resented the fact that this program was established that afforded preferential treatment to one group."

Some black business owners understand the resentment.

Stanley Harrison, who runs a small janitorial-supply company in Columbus called Vantage Paper, said governmental set-asides in particular "have the tendency to make people complacent and not actively seek private-sector work."

"Some companies are so busy seeking the minority label, they forget to just be a business," he said.

"No one said it was going to be fair all the time, and there'll be some places you simply can't get into.

"It's a free-market economy."

But many worry that without set-asides, those charged by law to determine the lowest "responsive and responsible bid" will have less incentive to choose a black company.

Contracts can be designed to exclude certain companies, they say. Simple things, such as specifying certain kinds of products, can automatically narrow the field.

In the awarding of contracts, state officials say, seldom does the lowest bidder not get the deal.

Politicians expect debates about preferences to intensify this legislative session.

In the wake of the Ohio Supreme Court ruling, Sen. Eugene Watts, R-Dublin, and Rep. Bryan C. Williams, R-Akron, introduced identical bills to replace minority programs with a "Challenged Business Enterprise" plan.

They want to reserve a share of state contracts for qualified companies owned by individuals who have "diminished credit and capital opportunities," regardless of race.

This week, the Legislative Black Caucus again called for a study to recognize that discrimination persists in contracting.

Contracts top $1.8 billion

The state's set-aside system was established as a way to help correct past injustices against blacks. Hispanics, Asians and American Indians also were included.

Since 1991, the state has spent $1.8 billion with minority-owned companies, according to the Ohio Department of Administrative Services. Overall during that time, the state spent $18.4 billion on work in areas of business where minority companies were operating.

Additionally, private contractors reported to the state that they awarded $368 million to minority companies during that time.

Just how much business minorities secure in the private sector, however, remains unclear because the state has no tracking process.

Nationwide Insurance, for example, says 18 percent of the cost of its new Downtown arena is being directed to minority businesses. The company could not say how much other business it does with those companies.

"While all the attention has been focused on government set-asides, minorities are being locked out of the private sector, where business has been expanding for seven straight years," said Curtis J. Moody, president and chief executive of Moody/Nolan Ltd., one of the area's largest architectural and minority-owned companies.

"The goal is to increase our private-sector work. We're absent there. And that's where race relations are best tested."

For now, black entrepreneurs look to the state to fix the only cushion they feel they have left.

They are unsure how the confusing events of recent months will affect their businesses.

While state officials say no contracts were canceled when the state program was put on hold last fall, some businesses that thought they had work lined up found themselves out of luck.

Before Graham struck down the Columbus set-aside program for the first time in 1991, the city was buying 10 percent of its goods and services from businesses owned by women or minorities.

The level has since declined by half.

Frustrations inevitably center on the controversial federal judge, who makes no apologies for his decisions.

Graham -- who for a decade has mentored black youths in South Linden, has taught a Bible class there for years as part of an inter-church effort, and has befriended, counseled and assisted scores of blacks around central Ohio -- said he understands when business owners talk about the existence of racism.

"If we are to reach any kind of permanent solution to this problem that has plagued our nation since the Civil War, that same kind of good-old-boy network will have to be built across the racial divide," the judge said.

Graham, along with the Associated General Contractors and even some black supporters of set-asides, favors a race-neutral program such as the one proposed in the recent state legislation.

That approach, which was incorporated into the Columbus program, could offer an acceptable revision for the state system, Graham said. More important, he said, it likely would pass constitutional muster.

Ronald W. Powell

STAFF WRITER

The San Diego Union-Tribune

Copyright 1999

Thursday, April 15, 1999

LOCAL

A San Diego City Council committee hammered out decisions yesterday that may give construction firms owned by members of minorities or women a better chance of competing for future municipal contracts.

The Public Safety and Neighborhood Services Committee approved spending $120,000 from July 1 through June 30, 2000, for an on-the-job training, mentoring and outreach program for construction firms that are small or owned by a minority member or a woman.

In a second prong in the effort to broaden opportunity, the committee directed city staff members to complete a proposal that would compel large prime contractors to hire subcontractors for as much as 20 percent of the work on a project. By insisting that the prime contractors reach out to small businesses, city officials intend that more minority- and female-owned firms would get work.

The actions were taken after committee members heard a report about city construction contracts for the current and past fiscal year.

For the 1997-98 fiscal year, the city committed itself to $171.8 million in construction contracts. Of that, black-owned firms received only $1.3 million and were awarded only nine of 598 contracts. Latinos received 53 contracts and $14.2 million. White women received 41 contracts and $5.8 million.

The current fiscal year has shown mixed results.

African-Americans have received three contracts worth $1 million out of 312 city contracts totaling $128 million. Latinos have been awarded 30 contracts worth $16.4 million. White women have received 21 contracts worth $7.8 million.

Councilman George Stevens said he was concerned about the low participation levels and suggested that the numbers should be higher on the basis of the groups' percentages of the San Diego population.

Stevens noted that about $12 million in contracts is still available on the San Diego Convention Center expansion project and said "people of color" should receive a part of that work.

"I'm not saying, 'Bring in people who are not qualified,' " Stevens said. "If people are there on your (certified construction) list, it should happen."

Representatives of the National Association for the Advancement of Colored People and the Earl B. Gilliam Bar Association, an organization of San Diego black attorneys, said the levels are appalling. "The bottom line is we need to get something done so there are no more reports like this," said Patrina Burnham, first vice president of the local chapter of the NAACP.

As one response, the committee decided to provide money to the Winning Opportunities for Responsible Contractors program, operated by the Minority Contractors Consultant Group. The program, established in 1996, provides on-the-job training, technical assistance and mentoring.

Landscaper Larry Price told the committee that he has landed contracts for $500,000 and $700,000 in part because of the benefits he received from the Winning Opportunities program.

The city staff will formulate a mandatory subcontracting outreach program based on recommendations by the city Citizens Equal Opportunity Commission and requiring each prime contractor to dedicate 20 percent of its city contract to small businesses. The contractor's effort to reach out to those firms would be assessed before award of the contract.

City staff members were directed to clarify cost figures for a technical assistance, mentoring and outreach program proposed by a coalition of the Associated General Contractors, the Latino Builders and the Black Contractors Association. The results will be brought back to the committee within 45 days.

Jose Mireles, head of the Latino Builders, said the coalition's proposal has the prospect for positive change by fostering greater contact between minority construction firm owners and the largely white AGC.

But John Johnson, president and chief executive officer of the local chapter of the Urban League, urged committee members to vote down the coalition proposal. Johnson noted that the AGC filed a successful federal lawsuit in 1993 which struck down the city's equal opportunity contracting program, which had enabled construction firms owned by members of minorities and women to work on city construction projects.

Jim McKay

KRTBN Knight-Ridder Tribune Business News: Pittsburgh Post-Gazette -

Pennsylvania

Copyright (C) 1999 KRTBN Knight Ridder Tribune Business News; Source: World

Reporter (TM)

Monday, April 12, 1999

Blacks in Pittsburgh view the construction trade unions as racist, untrustworthy, exclusionary and nepotistic.

Leaders of the construction trade unions disagree yet recognize they have done a poor job of recruiting qualified minority candidates into their privately funded training programs.

Those are the bottom-line results of a study done for the 23 construction unions in the region by advertising agency Hallmark/Tassone as part of a broad labor-initiated campaign to identify and fix problems in their industry.

As a result of the study, the trade unions are taking steps to improve communications between themselves and members of the minority community with the hope of replacing decades of suspicion and mistrust with cooperation.

"We are willing to go farther than we've ever gone into the minority community to seek out applicants and work with the minority community to prepare those applicants to be successful in our programs," said Paul Quarantillo, assistant business manager for the Laborers District Council of Western Pennsylvania.

One key part of the initiative is the previously announced agreement with Mayor Murphy, contractors and the building trade unions to encourage the training and hiring of black and women workers, as well as city residents, for the stadium and convention center projects known as Plan B.

Another is the formation of a minority advisory committee to the Builders Guild, a union-funded initiative embraced by the construction industry to improve cooperation between workers, contractors, architects, engineers and building owners.

Also under consideration is revamping the way apprenticeships are publicized, creating a speakers bureau to take tradesmen into the communities to talk about life in the construction industry and the establishment of mentorship programs for minority contractors and construction workers.

The minority advisers include Councilman Sala Udin, a critic of the amayor's plan, who has been pushing for legislation that would reserve 50 percent of city-funded construction jobs for city residents, 25 percent for minorities and 10 percent for women. He did not return a phone call yesterday seeking comment.

Other members of the minority community tapped for the initiative said they were encouraged with the idea and called it a good start toward forming a mutually beneficial partnership.

"Of all the boards I'm on this is the one that has the most possibility for being able to make a real difference," said Linda Couch, local executive director of the National Association of Minority Contractors. "I think it was a big deal for them to realize that something needed to be done."

There's a long negative history that needs to be undone, according to a summary of 18 interviews with minority leaders conducted for the unions by Hallmark/Tassone.

Former initiatives to involve minorities in construction, such as Operation Dig and the Pittsburgh Plan, were cited as positive but criticized for a failure to sustain minority employment over the long term. As a result, efforts to recruit minorities for Plan B projects are viewed with distrust.

"It's important that some sort of fence mending begin," said Cheryl Walker, a newly invited member of the minority advisory committee who is community development coordinator for Community Builders, a nonprofit management and development company involved in multi-family housing.

"People in the minority community, and I speak from personal experience, feel there is no relationship between the unions and the minority community. The unions believe they are trying hard to do something," she said. "But sometimes perception becomes reality."

The unions have a vested interest in attracting and nurturing new members both because of a dramatic decline in the region's skilled work force and the large number of big construction projects now on the drawing boards.

Union business managers, organizers and apprenticeship coordinators interviewed by Hallmark/Tassone say they have aggressively and actively recruited qualified minorities, particularly in the past five years, but are frustrated by lack of results.

They cite their participation in job fairs, affiliations with pre-apprenticeship training programs such as Youth Built and the Hill Community Development Corp., and multiple mailings to churches, schools and minority organizations.

They acknowledge there are barriers, including the seasonal and cyclical nature of construction work, entrance tests and mandatory requirements that apprentices have a high school diploma, a valid driver's license, transportation and pass periodic drug screenings.

Those requirements won't ease, but Quarantillo said the building trades will now be able to direct applicants to assistance in preparing for admittance tests or overcoming other barriers.

This year there are some 540 openings for apprentices in the 23 trades that comprise the Building Trades Council. There will be at least another 500 openings next year.

Those who are accepted will receive four to five years or training and on-the-job experience at no cost except for an initial application fee. The International Brotherhood of Electrical Workers, for example, estimates that its program is worth about $150,000, including training and wages paid.

Richard Stanizzo, business agent for the Building Trades Council, said the unions are committed to filling at least 25 percent or more of the current openings with qualified minority candidates.

But Stanizzo warned that the construction industry isn't the solution for all of the region's unemployment problems. He said the new baseball and football stadiums and the convention center expansion together will employ fewer people than did the new Pittsburgh International Airport terminal that opened in 1992.

"We're not the answer to every unemployed person in the area. We can only be one component, one part," Stanizzo said. "But hopefully this is going to change not only thought processes but training programs to fit what's going on in this region."

The Grand Rapids Press

Copyright 1999

Wednesday, April 7, 1999

Editorial

The entire country struggles with racial discrimination and poverty, so it follows that everyone should want to help in making corrections.

Cities, schools should work hard to hire more minority contractors

Many city and school officials believe that their responsibility in hiring minority contractors ends where laws on discrimination begin. But broad opportunity and prosperity in this community requires going beyond the minimum, doing more than what the laws require.

Unfortunately, in Kent and Ottawa counties, few local governments and school districts seem to be making much of a priority of recruiting minority contractors, particularly in the construction trades. At stake is not just a few jobs. Cities and school districts in this area pump tens of millions of dollars annually into the local economy through road improvements, building repairs and new construction projects. There is plenty of work to go around, certainly enough to help new or struggling minority entrepreneurs gain a foothold.

The affirmative action task isn't easy. Grand Rapids once had a quota of awarding at least 11 percent of any public project to minority-owned businesses, but the U.S. Supreme Court struck down quotas in 1989. The city changed its quota to a "goal" and the following year minority-owned contractors fell to just 3.4 percent of city business. The numbers have improved, in part because the city is working aggressively with minority firms through its Contractors Assistance Program. Contractors new to the business are able to learn about accounting, insurance, bonding, hiring and bidding.

The key aspect of Grand Rapids' effort isn't a numerical target. African Americans make up nearly 20 percent of the city, while Hispanics are about 5 percent. So an 11 percent goal is relatively low. More importantly, the city seems to have its principles correctly aligned. If the effort to help minority-owned businesses succeeds, the 11 percent target will be surpassed in time. Grand Rapids also is taking a broader view of minority contracts. The city is conducting a "disparity study" to determine how much money it allocates to minority-owned vendors for all contracts, construction and otherwise.

Hiring minority-owned companies shouldn't be a job for Grand Rapids alone. The entire country struggles with racial discrimination and poverty, so it follows that everyone should want to help in making corrections. Governments at all levels should extend themselves well beyond the minimum required by law in order to improve opportunities.

A first step should be just knowing what percentage of dollars is spent on minority-owned firms. Kent County, for example, lets out millions of dollars in work each year through the Road Commission. The county spends even more annually on contracts with consultants, social service agencies, equipment purchases and supplies. Trying to get a fix on how much of that work goes to minority-owned firms is impossible. The county doesn't keep track.

The county also has declined to take part in the city's disparity study. Kent County Board Chairman Patrick Malone, R-Grattan Township, will only say that the county meets the "requirements under the law." Federal and state law, however, serve mainly to prevent overt discrimination. Kent County or Kentwood, Wyoming or Zeeland, the Rockford School District or the Ottawa Intermediate School

District shouldn't settle for such a minimal threshold.

Neither should governments take refuge in statistics showing that their communities have small minority populations. Every public body should be sensitive to improving opportunities for those who have been denied them in the past.

Public projects give minority-owned firms the experience they desperately need to compete in the private marketplace. Local governments and school boards must be active in seeking out minority companies and opening doors for them. In doing that, they help build a better future for everyone.

David McGinty, The Courier-Journal

The Courier-Journal Louisville, KY

Copyright 1999

Friday, April 9, 1999

BUSINESS

Though still in its earliest stages, United Parcel Service's huge hub expansion in Louisville is off to a solid start in meeting its minority hiring goals through its connections with a local civil-rights organization.

Jack Blaisdell, UPS's program manager for the multiyear, $250 million expansion, said the project's consulting arrangement with the Justice Resource Center "really has been a success for us."

UPS has pledged to award 20 percent of the construction and supply contracts for the expansion project to minority and female contractors, and to date it is ahead of that goal.

According to UPS figures, of approximately $30 million to $40 million worth of work already bid on the project, about 27 percent has been given to minority firms.

About 20 percent of the work, said Charles Alexander, a member of the Justice Resource Center and a hiring consultant for the project, has gone to African-American companies, an indication of how serious UPS is about its goals.

On other construction projects in the state, the Rev. Louis Coleman, founder of the Justice Resource Center, has complained that much of the so-called minority work has gone to firms owned by women and not enough to minority firms.

Coleman, who is currently leading protests to promote more minority hiring at the Louisville Slugger Field project in Louisville, considers the UPS project a success story.

"We feel very positive about the UPS project," Coleman said.

When the company must hire a majority-owned contractor, he said, it also tries to make sure the contractor has a minority-owned subcontractor to work with.

"That's the type of communication that's going on," Coleman said. "If a majority firm does not have AfricanAmerican people or people of color within their company, then they don't get used."

Alexander said UPS's hiring effort has been so successful because the company got its contractor and civil-rights leaders together early in the project "and said, 'We are dead serious about minority participation.'

"When you get an owner who says, 'I'm not going to put up with any nonsense, we're serious and we're going to play fair,' that word gets around very quickly," Alexander said.

At the beginning, UPS came under fire from Coleman for choosing Huber, Hunt & Nichols to manage the project. Coleman said UPS had missed an opportunity to hire an African-American-owned firm.

But UPS insisted it was serious about minority hiring and struck a three-year agreement with Coleman and the Justice Resource Center to help it find minority firms and workers and review bids.

UPS will pay the center up to $150,000 over the three years.

The arrangement is working well, Blaisdell said. UPS meets at least once a month with center representatives and the project's contractors to monitor hiring progress and tries to hire minority firms on each piece of the expansion put out for bids.

It also bids out the work in smaller packages to make it more available to minority companies that are smaller and perhaps less experienced at large jobs.

Typically, Blaisdell said, a project the size of the UPS expansion would be bid out in four or five packages.

UPS will probably bid it out in 30 or 40.

Blaisdell said the center has made finding minority contractors easier by compiling a master list of all the firms that have been certified as minority-owned by various major local agencies, in effect providing "onestop shopping" for contractors looking for minority firms.

In other cities, Blaisdell said, UPS has found locating and hiring eligible minority firms to be easier because "frankly, there was a little bit more help from the government sector - it's a little bit more mature process in some of the other cities."

He credits Coleman with having made better hiring methods for minority companies an issue in Louisville, and said Coleman's contacts with the minority community give UPS a means of establishing communication and credibility with contractors who might be skeptical of UPS's sincerity.

Blaisdell said the center's contacts with the minority community have also helped UPS avoid giving work to companies that were not really minority-owned.

"We actually put the first bid back out on the street again," he said, after learning through Coleman's contacts that the minority status of a contractor was doubtful.

Blaisdell recalled one day when he happened across Coleman leading a civil-rights demonstration. He stopped to talk with Coleman, he said, and while he was there, "it really amazed me, the number of people who went by and honked at waved at him. It really convinced me, if I want UPS's message to go out into the community here, this is a pretty good guy to know.' "

Jay Root

Star-Telegram Writer - Austin Bureau

The Fort Worth Star-Telegram

Copyright 1999

Tuesday, April 6, 1999

METRO

AUSTIN - Attorney General John Cornyn opposes race-based affirmative action, but that won't stop him from defending a state program designed to boost the number of contracts that go to women and minorities.

At issue is a lawsuit filed against the Texas Department of Transportation. A Houston businessman alleges that the highway construction program illegally uses race and gender in selecting contractors.

Cornyn "remains opposed to quotas in state government in any form or fashion," said Ted Delisi, a Cornyn spokesman. "The administration of the law in this case comes from the Legislature and we enforce it ... He is going to defend the state and its interests."

The first encounter in court between Cornyn's office and the Houston contractor is tentatively set for May 14.

In the lawsuit, Houston contractor Robert Kossman, an erosion control subcontractor, alleges that the affirmative action program at the agency illegally discriminates against him because he is white.

Kossman was one of two plaintiffs who successfully sued the Houston area's Metropolitan Transit Authority over its affirmative action policies. The case is on appeal at the 5th U.S. Circuit Court of Appeals in New Orleans. A similar suit against the city of Houston is pending in state court.

Corbin Van Arsdale, Kossman's lawyer, said his client will demonstrate numerous cases in which contractors turned him down because they needed minority or women subcontractors to meet their affirmative action goals.

"They tell him they can't use him because they have to use a company that falls into one of those groups," Van Arsdale said. "They'll say, 'You were the low bidder, but I have to use somebody else.' "

Efrem Casarez, who coordinates the Department of Transportation's disadvantaged business program, said federal rules govern contracting policies for projects that entail federal transportation dollars, as most do.

He said the program is generally stricter than similar programs affecting state funds. It requires, for example, that participants submit a statement of personal wealth documenting that the individual's net worth is $750,000 or less.

Under the Department of Transportation program, contractors must make a "good faith effort" to give a certain percentage of their business to disadvantaged businesses, including those owned by women and minorities.

Stories by Kathleen Longcore The Grand Rapids Press

The Grand Rapids Press

Copyright 1999

Sunday, March 28, 1999

Business

Construction is a funny business. From the outside, it can look like a network of good old boys who have done business for years.

But when it's time to bid on jobs, these colleagues turn into competitors. And few will give a break to a newcomer who will only increase the competition.

If you are black, Hispanic, a woman or another minority, it can be tough to break into that tight circle.

But Cory Smith, 31, owner of C&S Associates, is giving it a go.

Smith is typical of the freshman class of Grand Rapids area minority contractors. When he and a friend hatched plans for a concrete business, construction was the No. 1 growth industry here.

"We needed to get into a business that didn't require a lot of money up front," Smith said. They picked concrete -- a material needed in nearly every construction project.

"We figured that right there widened the opportunity, no matter what color you are," he said.

In its third year, C&S does city sidewalk jobs, foundation work, driveways and garage floors.

Smith is grateful to minority contractors who blazed the trail for him, and especially to the city's goal of awarding 11 percent of any public project's budget to minority business enterprises (MBEs) and 1 percent to women-owned business enterprises (WBEs).

The goals are "flexible targets," said Ingrid Scott-Weekly, who heads the city's Office of Equal Opportunity.

"We know, based on past experience, that there needs to be some program in place because -- left to their own devices – majority contractors aren't inclusive," Scott-Weekly said. The city can waive the goals if contractors show a valid reason they cannot be met.

Smith has mixed feelings about the jobs he gets under this program.

"You want to feel like you're there because somebody heard about your work, not because of the color of your skin or your gender."

But he knows he needs the exposure on city jobs to get others in the private sector.

The city program was forged during a decade of conflict.

In 1979 and 1980, minority contractors duked it out in court with city officials and majority contractors to get a share of the construction pie.

In 1980, city officials gave preference to minority firms on several projects, and the state recruited minority contractors for highway work.

But general contractors fought minority preferences. In complaints to the city, they said some businesses were getting jobs they could not handle -- leaving general contractors to pick up the pieces and foot the bill to get the job done.

"It's a five or 10-year process going from being in a trade to being a job supervisor and learning administrative skills," said John Doherty, vice president of Associated Builders and Contractors.

"Fifteen years ago, some of these guys were just coming out of trade programs, and they'd had limited leadership exposure," Doherty said.

"Someone would say, 'Hey, we need a minority contractor. You do a good job on carpentry. Why don't we use you?' There was no orderly process to move people through to give them the information they needed to run a business."

Minority watchdogs hung tough during this period. At least one project -- a public works job in Kent City -- was rebid because it did not follow federal minority preference guidelines.

In 1984, a Grandville contractor lost a city job because it didn't award a percentage of the work to minority businesses.

In 1986, federal officials began questioning quotas, and in 1989 the Supreme Court struck them down.

This was devastating to area minority contractors, who were least able to weather the downturn that followed.

Grand Rapids dropped its preference policy, believing it wouldn't stand up in court. Minority participation in city projects – which had been at 11 percent of the dollar volume in 1988 – fell to 4 percent in 1989 and 3.4 percent in 1990, according to Scott-Weekly's office.

The high court left the door open for race-conscious policies, ruling they were legal if a study showed there was a need for them. In 1990, a study in Grand Rapids showed minority business participation was far below the city's combined black-Hispanic population of 20 percent.

Grand Rapids is currently updating that study with an eye to expanding the program to include all city vendors. Sherry J. Williams, vice president of an Atlanta firm that specializes in these disparity studies, said she will look at how public dollars are being spent to see if it is fair and equitable.

During the 21/2 years it took the city to hammer out a new policy, a number of struggling companies went under, and the rift between majority and minority contractors deepened.

In 1992, despite strong opposition from Associated Builders and Contractors, city officials approved goals – not quotas – for minority-owned and women-owned firms.

"I think we recognized that there probably was some discrimination in the construction industry," Doherty said. "But we felt the city relied heavily on anecdotal evidence at public hearings. And we said, why just construction? Why shouldn't all vendors who deal with the city be required to comply?"

Since then, the number of MBEs and WBEs certified by the city has grown to 57 – 25 more than in 1991. Fifteen are owned by women.

There have been no lawsuits in recent years. "We've all softened. We've recognized the need to work together," Scott-Weekly said.

Doherty agrees. "We're kind of all in this boat together, and I think we've got a good relationship developing with minority contractors now," he said.

Minority contractors are grateful for the progress. But they say there are still ways to discriminate.

One area contractor said he couldn't bid competitively on jobs because his supplier of material was giving his competitors better prices. Others say prime contractors withhold final payment, forcing the subcontractor to borrow money to stay afloat.

And banks typically charge small businesses more interest on operating loans than large established businesses because of their credit track record.

"You can put all the goals you want out there. But they can still starve us out monetarily," said Mike Burns, owner of Burns Contracting Inc.

Figures show newcomers in construction, whether minority or not, have a tough time making it.

Some go under because they get stretched too thin, said Tom Healy, president of Owen-Ames-Kimball, one of the area's largest prime contractors. They don't have the resources to supervise the job, handle the payroll, keep the books, and churn out bids on new jobs to keep money coming in. And start-up businesses often don't have the healthy cash reserves they need while waiting months to get paid for the job.

"That's the problem is this business -- cash flow," Healy said.

Many minority contractors say they wait months and even years to get paid.

Gary Wiersum, who has American Indian heritage, did preliminary road work for the city as subcontractor before last summer's Grand Prix in downtown Grand Rapids. The work was done in April. His company, Bogard Construction, was supposed to be paid by Aug. 1.

A spokesman for the Grand Prix Association said the contractor who was to pay Bogard got his money soon after the race at the end of July. But Bogard didn't see a cent until late November. Meanwhile, he paid interest on operating loans.

There has been progress toward contractor equity, but it's "a slow crawl," Healy said. After 15 years of affirmative action here, there are still no minority contractors with pockets deep enough to tackle the big jobs currently on drawing boards, he said.

Les Allen, president of the Minority Contractors Association, agrees. He worries that the national backlash against race-conscious programs may shut down the city's program before any minority contractors in this area get big enough to be prime contractors.

"I see a sunset coming on affirmative action," said Allen, 31. He is concerned the county and the DDA, with no specific goals for inclusion, may leave minority contractors out of millions in public projects. "We're looking at $24 million in airport construction, a $260 million convention center and an $80 million justice complex."

Scott-Weekly said county officials turned down an invitation to become part of the city's new disparity study.

Pat Malone, chairman of the Kent County Board of Commissioners, said the county has no interest in the study. "Our policy is to provide equal employment. We're meeting the requirements under the law," he said.

No other large city in the area, including Holland, Kentwood, and Wyoming, has a goal program like the one in Grand Rapids. They do, however, tell contractors they must abide by equal opportunity laws.

A Grand Rapids native, Allen started Onyx Construction with a partner, James White. They did rehabs of old houses until they proved themselves by building two South Division Avenue restaurants, the McDonald's near Hall Street and the Burger King near Franklin Street.

Allen said they got those jobs only because they were the developer. Now Allen is teaming up with electrician Jimmie Taylor Sr. and plumber Bill Brooks to become a general contractor and supplier. The trio formed Brooks Allen and Taylor Construction this month.

"People have learned to respect us as individuals in our own companies, and if they see us coming together as a team, hopefully we'll be able to grow into a company like Security Builders (a large, minority-owned commercial builder) and someday an O.A.K (Owen Ames Kimball)."

As a general contractor, they could help other minority tradesmen break into an industry that hasn't always been welcoming. "It's definitely an uphill climb," Allen said.

Lela Garlington The Commercial Appeal

The Commercial Appeal Memphis, TN

Copyright 1999

Friday, March 26, 1999

News

A lawsuit challenging the city school system's preference program for minority businesses is on hold as the parties discuss a settlement.

A federal court hearing on a preliminary injunction set for Thursday was postponed to April 30.

Paul Stanley, executive director of the West Tennessee Chapter of the Associated Builders & Contractors, said attorneys representing the chapter, the school district and two minority contractors groups have met to see if a settlement could be reached and a trial avoided.

Although the talks were productive, Stanley said, "I'm afraid no matter what the settlement is I think we're going to have a hard time selling it to the school board."

Attorney A C Wharton Jr., who is representing the minority contractors groups, said he believes there is some middle ground: "Litigation is a lose-lose proposition. I believe we can sit down and come up with something meaningful and enforceable."

The ABC chapter and seven local contractors sued the school board last year claiming the district's 1996 minority participation plan has caused the district to pay more for construction projects that have benefited only a few minority subcontractors.

A temporary restraining order issued this month remains in effect.

U.S. Dist. Judge Jerome Turner said the district couldn't award two construction contracts for work at Hamilton Middle School and Mitchell High School.

The school board had voted to award those contracts to contractors who had higher minority participation and a higher price tag. The two projects would have cost $411,000 more than the two low bids.

School Board attorney Ernest Kelly Jr. said Wednesday the board hasn't decided what it will do on those two projects.

School officials have options: award the projects to the lowest bidder, rebid the projects (and likely have higher costs) or delay the two projects until the injunction is heard.

After the judge issued the temporary restraining order, the Memphis Area Minority Contractors Association Inc. and the Memphis and Tri-State Chapter of the National Association of Minority Contractors sought to intervene in the lawsuit.

Both parties have consented to allow the two associations to join in the suit.

Similar lawsuits challenging such minority procurement programs have been filed throughout the country. In almost all of the cases local government agencies have lost in the courts.

But Wharton said the courts generally have no problems if a voluntary agreement can be reached by all parties.

Cliff Peale, Post Staff Reporter

The Cincinnati Post

Copyright 1999

Monday, March 22, 1999

BUSINESS

The city of Cincinnati has stopped enforcing its minority business set-aside program and will re-evaluate the use of percentage targets in a new program to be unveiled next month, officials said Friday.

A consultant had warned the city that the old program was "questionable" legally, said David Chapman, assistant to City Manager John Shirey.

"In light of legal changes, we need to restructure the program," Chapman said. "The new one will meet the legal requirements."

The current city program establishes targets to award to minority and women-owned businesses 30 percent of total construction contracts, 10 percent of professional services contracts and 15 percent of supplier contracts by setting aside bids for those companies.

In 1998, the city beat the targets in construction and professional services, but only 10 percent of the supplier contracts went to minority- and women-owned businesses, Chapman said.

The changes came after the city settled a lawsuit last fall that challenged its program. The lawsuit argued that setting aside bids for minority companies was unconstitutional. The settlement required the city to abide by all applicable state and federal statutes, said Clark Street, executive vice president of the Ohio Contractors Association, which filed the lawsuit.

But in late October, a federal judge threw out the Ohio set-aside program, arguing that state officials had failed to prove that contractors benefitting from so-called minority set-asides had been victims of discrimination.

The suit against the city called its set-aside goal "nothing more than a number pulled out of thin air in response to public demands and pressures by certain interest groups."

Gregory Webb, co-owner of D.A.G. Construction Co. in Cincinnati, said the set-aside programs were important to help small minority-owned companies get established in business.

"If it weren't for the set-aside program, we probably wouldn't have gotten our start," Webb said. "You always need it, because it's not a level playing field."

Yolanda Jones The Commercial Appeal

The Commercial Appeal Memphis, TN

Copyright 1999

Sunday, March 21, 1999

Metro

Minority contractors are uniting to fight a lawsuit aimed at stopping Memphis City Schools from awarding contracts based on race or gender preferences.

More than 30 minority contractors met Saturday in a meeting to discuss strategy and let others in on their work.

"If they stop awarding us the contracts, it will hurt really bad and set us back 30 years," said Lynn McCarty, owner of Amini Construction Demolition Environmental Inc., an eight-year-old Memphis company. "We can't and won't let that happen, so we must stand up and fight this lawsuit."

The West Tennessee Chapter of Associated Builders & Contractors filed the suit to eliminate guidelines based on race or gender preferences.

The ABC chapter says the school system's 1996 minority participation plan has forced taxpayers to spend too much for construction that benefits a few minority contractors.

U.S. Dist. Judge Jerome Turner issued a temporary restraining order March 5 to stop the contracts until a hearing is held Thursday.

"We must show up en masse at this hearing to let them know we are not going to give up our fight in this effort," said John Perry, president of the National Association of Minority Contractors' local chapter.

"If we don't win at the district level, we are prepared to take it to the Supreme Court level," Perry said. "All we want is our fair share of the pie."

David Acey, executive director of Africa in April Cultural Awareness Festival Inc., called the Saturday meeting in support of the contractors.

"We are all in this together, and we must work together and get out and talk to our governmental leaders, ministers and friends as part of our strategy to stop this lawsuit," Acey said. "We have all worked really hard to get qualified in this business and after giving us the key, they have changed the locks."

Lori Rodriguez

Houston Chronicle

Copyright 1999

Sunday, March 14, 1999

In the who-gets-what column of the city's imperiled affirmative action program, a big winner is Harris County Commissioner El Franco Lee, whose minority-owned firm last year raked in more than $1.3 million in no-bid contracts.

Another is state Sen. Rodney Ellis, an investment banker whose firm was appointed co-dealer in a $50 million city bond issue. And yet another is Gasper Mir, a former partner in a "Big Six" accounting firm who left to start a company that last year grossed millions, including $300,000 from the city.

Lee, Ellis and Mir are affluent, influential and politically connected minorities who have penetrated a system that mainly has rewarded affluent, influential and politically connected white males.

They may not be disadvantaged to the average person. But to the city of Houston, their firms are, making them eligible for the Minority, Women and Disadvantaged Business Enterprise (MWDBE) Program and millions of dollars in no-bid, affirmative action contracts.

They are lightning rods for a program under siege.

Three separate courts are considering charges of reverse discrimination against white males as well as ballot changes the city made to the 1997 petition-driven assault on the program.

Arduous requirements that prime and mainly white contractors show "good faith" by giving written notice of potential subcontracts to dozens of MWDBEs, groups and publications are driving even the well-intentioned to shams and end-runs around the rules.

Opponents who forced the 1997 referendum, meanwhile, invoke the names of Lee, Ellis and others as proof that the process is prone to cronyism, rewards the politically adept and helps those who no longer need it.

Even some who believe the city program needs to exist, such as state Rep. Ron Wilson, who has filed one of two bills to reopen financial records of MWDBEs closed by the last Legislature, say it is flawed.

"I've always refused to compete in that program, and I'm not beating my chest here," says Wilson. "It's not that I haven't done business with the city. I have. But it's always been straight-up and I've competed with firms that are similarly situated.

"It's just unfair for me as a lawyer who is an elected official and does politics for a living to compete with other African-Americans, Hispanics and women lawyers who don't. Just because of the nature of what I do, I have access to City Hall that many of them don't.

"Affirmative action programs are for people who would not normally have access."

Consider Lee, Ellis and Mir, all recipients of a program some believe should help only businesses disadvantaged in terms of manpower, capital or experience.

Lee arguably is one of the state's most powerful elected African-Americans. He pulls in nearly $116,000 annually as a commissioner and was a key ground-floor supporter of Mayor Lee Brown.

The commissioner also is majority owner of ESPA Corp., an engineering and architectural services firm whose contracts awarded under the MWDBE program jumped from $261,000 in 1997, the last year of Mayor Bob Lanier's term, to $1.3 million in 1998, the first year of the Brown administration – a five-fold increase.

Ellis is a longtime force in the Legislature who three sessions ago chaired a committee scrutinizing the state's similar Historically Underutilized Business (HUB) Program and recently served on a Senate panel that examined race- and gender-based policies in public employment, education and contracting.

He also is an attorney who founded Apex Securities Inc., an investment banking firm that has underwritten $40 billion in financing across the country and recently merged with a Wall Street firm. In August 1998, Apex, also a certified MWDBE, was appointed by the Brown administration as co-dealer with Merrill Lynch & Co. on a $50 million airport system bond issue. In the last fiscal year, Apex Advisors Inc., another Ellis-owned consulting firm, received $18,000 as an MWDBE.

Mir is a former partner in the prestigious KPMG Peat Marwick accounting firm, a past chairman of the Hispanic Chamber of Commerce and a member of the board of the Greater Houston Partnership. Since 1988, he has been the Mir in Mir, Fox and Rodriguez, a certified minority- and woman-owned business whose clients include Houston Community College, Wharton Community College and the University of Houston System. Mir estimates his firm earned close to $7 million in gross income last year, including the $300,000 from the city.

To opponents of the city program, these men are no more appropriate recipients of government help than they are.

"I met Gasper," says Ed Blum, the investment banker who drove the referendum against the program. "If he's not convinced that he can compete on his own, then I sure in the hell am.

"A program that is described as MWDBE needs to recognize that 'disadvantaged' cuts across ethnic, racial and gender lines. For a program to set aside a portion of their contracting dollars to minorities who are as successful as Lee or Ellis defeats the whole purpose of government trying to play a role in offering a helping hand to people who have been left out of the system."

In fact, as Lanier, with all the political cachet of a rich, white developer, cogently argued during the controversial election, the MWDBE program is not and never has been about fixing poverty.

It has been about fixing disparity.

In 1984, the Houston City Council passed the ordinance "to stimulate the growth of local minority and women business enterprises by encouraging the full participation of minority and women business enterprises in all phases of its procurement activities and by affording them a full and fair opportunity to compete for all city contracts." Minorities and women were then getting less than 1 percent of that business.

The program has been about money and putting some in the hands of minorities and women in Houston.

Today, after two major revisions, including newly added graduation levels, the program sets an 11 percent participation goal for purchasing contracts, a 17 percent goal for construction and a 24 percent goal for professional services.

In the fiscal year that ended last June, MWDBEs got 16.9 percent of the total $900 million in contracts awarded. The vast majority of the rest went to firms owned by white men.

"In our city, the affirmative action program provides an opportunity for 80 percent of the population to compete for 20 percent of the work," says Brown, a former police chief in Atlanta, New York City and here who recalls getting rejected by multiple departments despite his experience and four degrees. "I don't think that's too bad."

While $152 million went to MWDBEs in the last fiscal year, those dollars were spread among white women and more than four minority groups, including Asian-Americans, Native Americans and other smaller groups with no documented history of discrimination here.

Divvy that up among the several hundred MWDBEs that did business with the city last year and the result is what some minorities openly consider chump change.

ESPA revenues have benefited from the Brown administration much as Pate Engineers did from the Kathy Whitmire administration even as owner Gerry Pate was serving as her 1989 campaign finance chairman. About this phenomenon, Councilman Orlando Sanchez is blunt.

"It's called political patronage and that's natural. That's perfectly legal. It's a choice," he says. You either hire another firm with no relationship, he says, "or you hire El Franco Lee, who helped me and advised me. Both of them are perfectly legal firms. Both of them are perfectly capable. It's a no-brainer."

But even pulling in four subcontracts and two prime contracts totalling more than $1.3 million, ESPA's take pales next to the single $18.9 million contract awarded MWA/Brown & Root in fiscal 1998 or the three contracts totaling $3 million awarded to Turner, Collie & Braden or even, for that matter, the $2.8 million contract awarded to Pate Engineers.

Mir's firm, after former Controller Lloyd Kelley privatized some office functions, has seen revenues from the city grow from $10,000 annually for its first eight years as an MWDBE to the estimated $300,000 last year. But that cannot compare with the three contracts totaling nearly $1.3 million awarded in the last fiscal year to Peat Marwick, the firm Mir left with another Hispanic man and a white woman to launch one of the first minority-owned public accounting firms in Houston.

"You do see the irony?" asks Ellis. "If you go give a solid waste contract to somebody with a pickup truck and shovel then they'll say there's cronyism, they're not qualified.

"If the contract is awarded to someone who has a fleet of trucks, who has a business, who has an accountant, who has a system, someone who has computers, who has taken the risk, they've raised the capital, they are a legitimate business, then they say they're too successful."

To Ellis, minorities and women are disadvantaged because they were shut out of the system for generations and, if the city program were to go away tomorrow, most of them would be again.

"White folks didn't look after us before affirmative action and there's no reason to believe that white folks would take care of us today," agrees political consultant Marc Campos. "They didn't back then. Why should they now?"

Campos, whose Campos Communications also is a certified MWDBE, freely admits disappointment that he worked for the Lanier campaign but never could "cash in." He also admits making calls to City Hall on behalf of engineers and architects seeking contracts.

"There ought to be outrage that 80 percent of the business is still going to white-boy-owned firms," says Campos. "Where's the outrage for that?"

When University of Houston political scientist Richard Murray considers MWDBEs doing business, urban-style, he quotes the late Chicago columnist Mike Royko, who once said, "The motto at City Hall should be, 'Where's mine?' "

"A lot of that mindset exists among groups that have been historically shut out," Murray says. "When they're finally politically effective, there's a sense of 'Our nose has been pressed against the glass so long, now it's our turn.' "

But sensibilities are different now, he says. "You can't say that. So you talk in code. You talk about the general benefits of affirmative action even if everyone knows who it mainly helps."

To a person, administration officials insist that construction contracts are competitively bid and professional services, like legal, architectural or engineering, are awarded on qualifications.

"There's no favoritism in any of this stuff," says Public Works director Jerry King. "It's all straightforward. You try to pick the best firm in the design area and, in construction, you try to go with the low bidder."

When it comes to the MWDBE goal that each contractor must meet, says King, "If he says he can't find anybody, then we say, 'What about these guys?' We don't say, 'You've got to use this guy here.' There's no way."

Contractors and even City Council members, both on the record and off, beg to differ.

Jorge Casimiro, chairman of the Hispanic Chamber of Commerce's political action committee and vice chairman of the local Hispanic Contractors Association, owns Stature Construction Inc., an MWDBE. While Casimiro is now building Hyde Park Crescent, the largest, high-end townhome project in Montrose, he supports the city program and estimates it accounts for 5 percent of his business.

About the political nature of his public work, Casimiro is candid: "Even in construction, everyone says it's the low bidder but, in the real world, it's not. Beauty is in the eye of the beholder, and the low bid is in the eye of the guy who's going to sign that contract and award the job.

"We have kept the jobs and gone on based on our merit. But to get in and get some work, we've had to go to our political leaders."

Contracts for professional services are selected by staff and committees from the city departments involved, like the controller's office, finance and administration and public works, who go behind closed doors and subjectively evaluate the competing firms. That selection is routinely approved by the City Council without debate and is especially vulnerable to suggestion.

"It can't be tit-for-tat," says Murray, of the payback nature of some awards. "That would be illegal. But practically speaking, some government business can be awarded at the discretion of the administration and, to that extent, it can be a political decision."

In the wake of the bruising 1997 election, laden with images of the insider element, a council committee began developing appeasing provisions to wean MWDBEs theoretically strong enough to compete on their own. Adopted in December, the levels are based on industry definitions of "small" firms by the federal Small Business Administration and will disqualify firms that surpass income limits for three consecutive years.

For building, highway, street, bridge, water, sewer and similar heavy construction contractors, the cutoff is $17 million. For special trade construction contractors, including electrical work, carpentry, drywall, plastering, painting, plumbing, roofing, drilling and insulation, the cutoff is $7 million.

For accounting and auditing services, like Mir's business, the cutoff is $6 million. For legal services and investment banking, like Ellis' business, the cutoff is $5 million. For engineering and architectural services, like Lee's business, the cutoff is $2.5 million.

Opponents call the graduation levels, which the city says will cull 6.7 percent of a sample 435 firms, meaningless.

"To me, 'disadvantaged' would be guys who are living under a bridge when it's cold or in a soup line down on Canal Street. That, to me, would be disadvantaged," says Robert Kossman, a white subcontractor who is suing the city alleging reverse discrimination.

Because the new levels are based on company and not personal net worth, if Magic Johnson with all his megabucks were to open a firm in Houston today, it could be certified as an MWDBE and awarded contracts under the program.

But after the bitter election and still facing a direct court challenge, the city had to fortify the program, and the graduation levels were a way to do it.

In an ominous forecast of decisions to come, U.S. District Judge Lynn N. Hughes in November 1997 struck down the Metropolitan Transit Authority's similar program, saying the white male members of the Houston Contractors Association (HCA) had unfairly lost business because of well-meaning but flawed policies. "Basing governmental action on race offends the American Constitution," Hughes wrote in his judgment.

Hughes is the same judge who is presiding and expected to rule imminently on the nearly identical 1996 lawsuit filed against the city program by HCA member Kossman, a plaintiff in the Metro case.

If Hughes rules against the city, it will take its appeal to the 5th U.S. Circuit Court of Appeals in New Orleans, where Metro's appeal also is pending. The 5th Circuit is the same court that in 1996 ruled the University of Texas Law School could not use race to determine admissions or scholarships.

Meanwhile last June, state District Judge Sharolyn Wood threw out the results of the 1997 election that upheld the program by a 54-46 margin, saying the city changed the intent of the 20,000 people who signed petitions forcing the vote. Led by Lanier, who contended that the original petition language was misleading, the City Council substituted its own ballot wording.

As that judgment awaits Wood's signature, the Texas Supreme Court also has agreed to hear arguments April 8 on whether opponents led by Blum had the right to block the election because of the ballot-language change.

The city program, by every legal measure, is in trouble. A formidable African-American presence at the polls, a Lanier-led consortium of downtown interests that included the Greater Houston Partnership and strong editorial support of the Houston Chronicle bought it some time. The graduation levels and inclusion of the disabled make it more palatable. But even Councilman Jew Don Boney, who chaired the revision committee, is in full defensive posture.

"Why isn't anybody talking about graduating Brown & Root?" says Boney of the firm that received five prime construction contracts in fiscal 1998 totalling nearly $12 million. "Why isn't anybody talking about graduating any of the white firms that have made tens of millions of dollars? Why is there only discussion about graduation of women- and minority-owned firms who have never reached a level of contract awards, even with competent work, as any of the white male-owned established firms?"

The obvious answer is that white male-owned firms don't get a city preference that they need to graduate from. Ellis says that ignores a lot of history.

"They got a preference," he says. "Did you forget we had 200 years of slavery in this country? They had a 50-yard advantage in the playing field and they kept it."

Minority- and women-owned firms are only trying to catch up, he says. "Why should the glass ceiling be restricted to a certain level for minorities and women? How will we ever have ESPAs become Brown & Roots, Pierce Goodwins, Turner Collie and Bradens? How will they ever break through the glass ceiling and be players?"

While Mir and Lee admit they could compete without the program, neither apologizes for his participation. When Mir, Fox nine years ago landed the city's Housing Authority audit, it was the first small or minority firm ever used by the agency.

"When I left Peat Marwick, I left making more money than I'm making today and people asked me, 'How can you participate in these programs for the disadvantaged when you're obviously not very disadvantaged?' " says Mir.

But Mir says the program provided his fledgling firm desperately needed income in its early years, as well as the experience it lacked in conducting government audits. Today, he says, the firm competes as a prime contractor instead of as a sub, has a diverse staff of 70, regularly employs other MWDBEs as subs and also guides them to other accounts.

"That's a commitment that we've made," says Mir, "to help other MWDBEs break into the system."

Before certification in 1994, Lee's ESPA had been awarded three prime contracts in 1991, 1993 and 1995 totaling about $995,670. As an MWDBE, the firm has received contracts totaling about $2.5 million. Lee estimates city contracts account for about 20 percent of ESPA's annual income.

"It's just an interesting phenomenon that success breeds contempt," says Lee. "I guarantee you the only reason that I'm being chosen is that I've got a team of folks they like working with – they like their demeanor, they like the end product and they make a profit.

"It's not because somebody is shoving that company down their throat, and that is the hidden assertion in the whole discussion of whether the program is being abused."

While Lee strenuously denies he is being rewarded for supporting Brown, Mir openly says the politically astute fare best.

"That's true for minorities as well as non-minorities," he says. "Just go to any of the major engineering firms and look at their political contributions to campaigns and officials. When I was a partner at Peat Marwick, we had our people who played that game. That's the advantage, quite frankly, that we brought to our firm when we left."

Another highly placed MWDBE owner also is blunt about City Hall under Houston's first black mayor. While the same handful of firms still get the major contracts, he says, minority firms are getting a bigger share under Brown.

"That is a bone of contention," he says. "Those old boys are not getting the profit margins that they were getting out of previous mayors . . . "

At the polar ends of the affirmative action debate in Houston, Lanier and grass and sod subcontractor Kossman both pull out copies of the Declaration of Independence and U.S. Constitution, saying all men are created equal. Like who should or should not qualify for the MWDBE program, the documents are open to interpretation.

"I can't do anything about my skin color," says Kossman, who claims his low bids routinely are turned down by prime contractors trying to meet their MWDBE goals.

"Look around. There's not a Lincoln Continental parked in that lot. We're not officing in River Oaks," he says of his nondescript plant and well-worn equipment off Beltway 8 and Veterans Memorial.

"This gets down to the meat and potatoes. Whether Lee Brown is mayor, Rob Mosbacher, whoever. It doesn't matter to us. We just want to be treated fairly and equally by these white contractors."

Kossman worked for presidential hopeful George McGovern, protested the Vietnam War and came to Houston as a special education teacher of black children.

"I'm not one of the boys," he says.

But in his Kossman Contracting Co. Inc. offices where one wall boasts pictures of his black, Hispanic and female staff, another wall holds a blown-up version of a letter. The linchpin of his lawsuit, the letter from Colt Utilities Inc. rejects Kossman's low bid on a 1998 project, saying Colt "is obligated to use an MBE/WBE approved firm in order to meet the 17 percent participation required by the City of Houston on this project."

If perception is everything, it is a damning letter that goes to the heart of whether city goals are administered so stringently that they amount to quotas.

Generally, courts have held goals constitutional and quotas unconstitutional. The U.S. Supreme Court in 1989 struck down a requirement by the city of Richmond, Va., that prime construction contractors sub out at least 30 percent of work to firms owned by minorities.

Targeting presumed victims of societal discrimination was not enough, the court held. To justify the program, the city had to document historical discrimination in the construction industry against the specific groups included, and narrowly tailor its program to remedy just that.

In Richmond, as in Houston, the program included Asian-Americans, Native Americans and other smaller ethnic minorities with no presence, let alone history, in that city's construction.

After that ruling, Houston under Lanier, Texas and other entities rushed to perform "disparity studies" aimed at proving past discrimination. But in making his Metro ruling, Judge Hughes disparaged the "intellectual depth" of Houston's study.

Also, the Clinton administration moved last month to conform to a 1995 high court decision that cemented the Richmond case's "strict scrutiny" by finding in favor of a Colorado subcontractor who claimed he lost a state contract because of federal MWDBE requirements.

In response, the Transportation Department is dropping required targets for MWDBE participation in all federally assisted highway, airport and transit projects. Entities using such funds, which include the state, Metro and the city aviation department, are now expected to promote affirmative action primarily through broad, race-neutral policies.

The "disadvantaged" portion of the city program, seized upon by opponents, refers to the federal designation for targets that automatically included minorities and women. But under the new rules, people with personal net worth of more than $750,000 are no longer eligible for disadvantaged status and white men who can show they are "socially or economically disadvantaged" will qualify more easily for the program.

For the local chapter of the Associated General Contractors (AGC) of America, whose national umbrella participated in both of the Supreme Court cases, and HCA, which is inalterably opposed to the city program, it was a presage.

"It's our research that this program as administered by the city, as much as we've all agreed to it, is not a legal program," says AGC executive vice president Pat Kiley. "It would not withstand a full legal challenge because we don't think it's based upon the required studies that prove historical discrimination."

As a breed, though, Kiley describes contractors as "bold, risk-taking, entrepreneurial independents" who sign on to deliver a project on time and within budget, preferably with crews they've worked with and know they can trust.

Choosing unfamiliar firms off a list is "a shotgun wedding kind of thing," he says.

"But the very nature of a contractor is 'I want to go do something and, if it's tough, that's what I signed on to do. I can build around it, I can run over it, I can bulldoze it out, I can solve a problem.' "

"They're just saying, 'It's another condition to deal with; I'll deal with it.' "

How they deal with it is like sausage. The end product may meet the specs but you really don't want to know how they get there. According to interviews with contractors who did not want to be named, it can work like this:

A contractor can complete a street project using his permanent crew. He bids a $400,000 contract that has a 17 percent MWDBE "goal" of about $23,500. He includes in his bid the name of a certified MWDBE that may or may not have the supplies, labor or skills he needs. He is the low bidder. He calls the MWDBE owner. He offers a $3,000 check in exchange for a $23,500 receipt.

He gets his contract. The MWDBE gets money. The city gets its goal.

Or it can work like this: A contractor can complete a sewer project using his crew. He bids a $500,000 project that has a MWDBE goal. He needs pipe and can meet 50 percent of his "goal" purchasing from a certified MWDBE. No certified MWDBE has the pipe he needs. He gets a certified MWDBE to buy the pipe from a non-MWDBE pipe supplier. The certified MWDBE jacks up the price, sells it to him and takes a cut.

He gets his contract. The MWDBE gets money. The city gets its goal.

Or like this: A contractor, who can complete a road project using his crew, gets his regular Hispanic or black driller certified as a sole-proprietor MWDBE. He bids a $600,000 project that has an MWDBE goal. He lists his driller as his MWDBE. He pays his driller extra.

He gets his contract. The "MWDBE" driller gets his money. The city gets its goal.

Not every prime contractor wants to do an end-run around the goals. Some make what they consider genuine efforts to comply, and some succeed.

"If I'm low bid and I knew I was going to lose a contract just because I lacked a minority sub, from that standpoint, I would get creative. I would do what it takes," says another contractor. "Because it's not a goal. It's a quota.

"The city says it's a goal. They say they have a 'good faith, good effort' clause, but it means a quota because without it, we're going to lose. Without it, the low bid would not win."

City officials, in an echo of Lanier's administration, insist they require recipients of contracts to make only a "good faith" effort to meet goals using MWDBE subs. If recipients cannot find any even with administrative help, say officials, they can go with the low bid or seek relief through independent arbitration.

"The obligation is that they simply look," says Lanier, who in 1995 increased the goals and toughened their enforcement. "There are jurisdictions where contractors would kill for that."

As outlined in the MWDBE directory and each bid package, the "good faith" effort requires construction bidders to "among other things" deliver written notice to all MWDBEs listed that potentially could be subs, to all minority and women groups listed and to all minority and women media listed.

There are 17 minority and women groups, including the Houston Citizens' Chamber of Commerce, which is listed second and provides a telephone number for its president, Alfred J. Calloway.

(Calloway is currently a mayoral assistant to Brown with an office near the mayor and formerly was chief of staff to Commissioner Lee. As a councilman, Calloway five years ago clashed openly with HCA members who accused him of delaying contracts and pressuring them to hire African-American subs.

(While Calloway denied making threats, he admitted calling contractors and questioning their use of women and other minorities to meet their goals. "What's wrong with blacks?" he asked then.)

In addition to Calloway's group and 16 others that must be contacted in writing to show "good faith," the directory lists 22 newspapers and publications – seven black, seven Hispanic, six Asian-American and two women's publications – that also must be notified.

Purchasing and vendor contractors must deliver similar written notice to potentially applicable MWDBE subs as well as to organizations and publications.

To call the "good faith" requirements onerous is an understatement.

"Basically, it's impossible," says one frustrated contractor. "We couldn't do it. It would actually cost more money to just meet the 'good faith' effort than it does to bid the whole project.

"But if I turn in a bid and I'm supposed to have 15 percent and I only have 14 percent, the city is going to write me a letter, except they never write a letter unless they have to. They call you on the phone and they tell you that you only have 12 or 13 percent and you need 15 and you're not going to get the job unless you can meet the 'good faith' effort."

Contractors who believe they have unfairly lost work or been treated improperly have recourse to independent arbitration. But according to David Bearden, president of Bearden Contracting Co. and a witness in the Kossman lawsuit, that also can be nightmarish.

In a series of letters between Bearden, who also is a former HCA president, and city officials that begin in August 1996 and continue through January 1997, Bearden is first notified he is the low bidder on a $989,000 street sewer project.

In subsequent letters, officials reject four truckers Bearden has listed as minority subs because they are not certified. Bearden says they are African-American truckers he has used for years and pleads to be allowed to keep them. City officials reject that request and give him five days "to address these deficiencies" or lose the bid to the next lowest bidder.

Bearden resubmits his list of proposed subs with his four truckers hastily crossed out and Geronimo Trucking handwritten in. He writes officials that the original truckers had charged an hourly rate of $25. Bearden could secure only one quote from a certified MWDBE in the time he was given, for $27. When he discovers one of his original truckers is certified after all, he asks to substitute Geronimo with the original trucker at the lower rate. Geronimo seeks mediation.

"It was just a big mess. It cost me a lot of money. I ended up winning but it was just a mess," says Bearden, who was halfway through with the job before the months of calls, correspondence and meetings were finally over.

"That's why we want this program to go away. It's not that we don't want to use minorities. We're using minorities."

An official sore point with most contractors is that their work forces invariably are 75 percent to 95 percent minority and, under the current program, they get no credit for that.

"We're doing our job by bringing people into our companies and doing absolutely everything that we can to give them the tools necessary to succeed," says concrete contractor Hollis Tautenhahn, with Listo Co.

HCA wants the city program replaced with a race- and gender-neutral one that targets small businesses and is based on need and merit. Also during the recent revision, HCA asked the city to include a line item in each contract for the additional cost of meeting goals because of hiring unnecessary subs, paying exorbitant rates or carrying inadequate firms. It never got out of committee.

"It's OK. Whatever. Change the goal from 14 to 15 to 35 percent," says one contractor who admits to regular "paper chases" for documentation of fake MWDBE participation. "I still got the same piece of paper and it still gets to fly around all the time."

"I just use white-out on it. Every contractor's got a bottle of white-out."

At City Hall, the MWDBE buck ends with the affirmative action and contract compliance division of the mayor's office. Deputy director Velma Laws, the hands-on liaison to the city's 2,000 certified firms, quotes an old song by James Brown: "He said, 'I don't want nobody to give me nothing. Open up the door, and I'll get it myself.' "

"That's what affirmative action does," says Laws. "It opens up the door that had been closed forever so that companies can just get in there, get a shot and get a chance to demonstrate what they can do."

To Laws, affirmative action is not about controversies like that of Lenoria Walker, the former division director who was removed last year after insensitive remarks about Councilman Joe Roach, a dwarf, and other ethnic groups. It's not about whether insiders get more than outsiders or the wordings of ballots.

To Laws, affirmative action is Jerry and Erma Palmer who, in 1990, left full-time jobs with one truck that became J&E Wrecker Service. "We prayed and we prayed on it and we asked God for guidance and wisdom," says Erma Palmer.

"We were working out of our home for the first four or five years and people never knew it. We lived in the Parkway Forest subdivision and you're not allowed wrecker trucks up and down those streets so we had to fix it so none of our truckers were ever there.

"It took some wheeling and dealing."

J&E's first big break was in 1994, when the newly certified MWDBE, with Laws' help, was awarded a towing subcontract from an initially reluctant prime contractor.

"It's been a blessing straight out of heaven," says Palmer of the city program that spawned what is now a five-acre plant, including a storage facility, a collision repair shop and four trucks.

J&E's gross income has gone to $250,000 annually. Palmer believes that if Laws had not intervened with the contractor who wanted to use a white-owned sub, it never would have happened.

"The next day, they started using us and we have had that work ever since," says Palmer. "That's all we ever needed from anybody is a chance to prove ourselves."

Opponents insist the city policies have not turned a single small contractor into a large one. That is relative. The policies have turned a single truck into J&E Wrecker Services.

Opponents also insist the program tilts toward people such as Ellis, Lee and Mir. That is partly true. But for every person like them, there are dozens like Diva Garza, who started a one-woman personnel service in 1982, rode out the bust and, in 1985, founded International Team Consultants, with a start-up loan of $15,000.

ITC's first formal and successful bid was for a city contract for temporary services. The next was for IBM. In August 1988, when ITC was acquired by StaffMark, a national firm with 250 offices in 30 states and 11 countries, her firm was grossing $18 million annually.

Garza has graduated from the MWDBE program, with honors.

"I don't like politics. I'm just a working person. I just go by the books," says Garza. "But I was all for saving the program because a lot of people think that we don't need it anymore and it's just not true."

"It helped me by letting me get a foot in the door. I never asked for a handout. I only asked for an opportunity to show what I could do, and that's all that minority businesses are asking."

In Richmond, Va., in July 1987, when its program was first overturned by a lower court, minority businesses were receiving 40 percent of city construction dollars. Immediately after the court's decision, that share fell to 15 percent. Within six months, it was less than 3 percent.

In Tampa, when the city's 25 percent affirmative action goal was legally suspended, the 22 percent minority participation in 1988 fell to 5.2 percent in the first quarter of 1989. Contracts awarded to black firms fell 99 percent; to Hispanic firms, 50 percent.

Talk to enough MWDBE owners in Houston and they'll say flatly that the only reason white contractors sub work to them is because they have to. Even Casimiro, who competes almost exclusively in the private and open market, recalls conversations with his white counterparts when the Hispanic Contractors Association persuaded the state to administer the plumbing exam in Spanish.

"We had people coming in here then saying, 'We're not racist. We have a lot of Hispanics working for us.' But it's when you get to the point of being a competitor that they get anxious," says Casimiro.

"It's all right as long as you're working for them but when you're competing, that's a different story."

Casimiro is in sync with white contractors on one point: With or without affirmative action, the long-term future of the construction industry is minority, primarily Hispanic. But Casimiro believes the city program can be its own worse enemy.

"Every minority wants to be a prime contractor," he says. "That's the way you grow and become the next Brown & Root. But they put in so many requirements, demand so much paperwork, that the guy just coming in can't compete."

City officials say critics can't have it both ways. Minorities and women have to prove their firms qualify for MWDBE certification in order to get their slice of the city contracting pie. White contractors have to prove they are genuinely trying to meet MWDBE goals in order to get their slice. That takes paper and plenty of it.

Officials also say that, while Lanier in 1995 raised the goals and strengthened enforcement, no prime contractor has ever been sanctioned for not meeting them or making a good faith effort. They say the city is making a good faith effort, too.

As chairman of the special Senate committee that recently reviewed the state's affirmative action policies, Lanier advised legally embattled entities such as Houston to consider alternate strategies for helping MWDBEs, just in case. Before he left office, he advised white contractors to also consider the alternative:

"What I told the contractors is, 'Look, if you think you're going to be an ever-declining percentage of the population and you're going to get all the business, then you live in a dream world. You're just going to move it away from affirmative action into a political process in which every contract is going to be fought out over who gets what.

"'In a way, I hope to hell you win, because I'd like to see you have all that trouble.'

"I told them, 'I've got my living made. I'm going to be out of here at the end of this year. I'll walk down the boulevard to the River Oaks Country Club, have my lunch and come back home. I hope they roll you every council meeting.' "

Houston's affirmative action program was begun in 1984 to ensure that some city contracts go to minority- and women-owned companies.

Here is a breakdown of city contracts during the most recent fiscal year (July 1997 to June 1998):

Of the $858.9 million awarded ...

(not including $41.1 million in purchase orders)

... $722.6 million (84.1%) went to companies owned primarily by white men ...

... $136.3 million (15.9%) went to certified minority- and women-owned companies

OWNERSHIP

Hispanics: $52.3 million (6.1%)

White women: $34.8 million (4.0%)

Blacks: $27.0 million (3.1%)

Asians: $11.9 million (1.4%)

Others: $6.2 million (0.7%)

Native Americans: $4.2 million (0.5%)

Lela Garlington The Commercial Appeal

The Commercial Appeal Memphis, TN

Copyright 1999

Saturday, March 6, 1999

News

A federal judge on Friday ordered the Memphis City Schools to stop considering race and gender when deciding which businesses will get private contracts.

U.S. Dist. Judge Jerome Turner granted the temporary restraining order in a lawsuit filed by the Associated Builders and Contractors, which represents predominantly white-owned businesses.

The ABC and seven contractors sued the school system in February 1998, challenging its 1996 Minority/Women Business Enterprise plan.

The plan provided goals for increasing black and female participation in construction projects as well as services and commodities.

Specifically, Turner said the school system couldn't award two construction contracts for work – including air-conditioning – at Hamilton Middle and Mitchell High School.

Those contracts – $411,000 more costly than the low bids – were going to contractors that did have higher minority participation.

Turner also warned school officials not to award any future contracts based on race or gender until he holds a hearing on March 15 on whether to grant an injunction.

He allowed the school district to continue collecting minority participation data as long as the information is not used as a factor in awarding bids.

He also based his ruling on a review of a 1994 local study that purported to have documented racial discrimination.

Nine local governments paid D. J. Miller & Associates almost $900,000 for the study.

Given a 1989 U.S. Supreme Court decision that such minority-participation plans must be, he said, "narrowly tailored to remedy past and current discrimination . . . I conclude it (the study) will not survive such a challenge."

Dr. Dennis Hirsch, associate superintendent for business operations, said he was disappointed in the judge's ruling.

He said he didn't want to speculate on what school officials will do with the two projects Turner halted.

Among its options, the school system can wait until the second hearing is held before making a decision. The schools could award the two contracts to the lowest bidders and save $411,000 or the system could rebid both of the projects and likely see an increase in the cost of 3 to 5 percent.

In February, the school board voted to award the partial replacement and renovation of Mitchell High to Wooldridge Construction Co. at a cost of $10.8 million with 25.5 percent minority participation.

The award included $279,000 in additional funds over the lowest bid, by Webb Building Corp. with less than 1 percent minority participation.

The Hamilton Middle renovation project went to Caroma Construction Co. with a bid of $7.5 million and almost 36 percent minority participation instead of to Zellner Construction with a low bid of $7.4 million and 1.5 percent minority participation.

Three lawsuits – facing the Memphis and Shelby County governments and the city schools – challenge their minority-participation programs.

The programs were created in the wake of the 1989 Supreme Court ruling that rewrote the rules by which governments can give minority businesses preference in awarding contracts.

The three lawsuits contend that local governments have spent millions of dollars in additional costs and the funds have benefited only a few minority contractors.

The district set a "goal" of having 27 percent of its total construction projects go to black-owned businesses and 8 percent go to businesses owned by white women.

Despite complaints from Hispanics and other minorities, the district only recognized firms owned by black people and women who had been certified by an outside agency that they weren't merely fronts for white-owned businesses.

In 1998, the district reported that during the past two years businesses owned by black people and white women pulled in 45 percent of more than $91 million in construction work.

About a month after the ABC suit was filed, one of the school district's consultants who did the disparity study warned that 70 percent of the minority procurement programs that set goals has been challenged in court and almost all of them have lost.

In arguing his point Friday, ABC attorney Ralph Golden attacked the 1996 disparity study conducted by Miller. He described the study as "fatally flawed" and that even a first-year practicing journalism student would ask such questions as "who, what, when, where and why."

He suggested some of the problems that black- and female-owned businesses may face may not be discrimination. Instead businesses may have problems getting bonding and insurance and may be unable to bid on jobs because of their size.

While the Miller study found that black construction companies make up almost 14 percent of the Memphis area market, the school district's goal for African-American participation in the construction area is 27 percent.

Despite the attempt at a second disparity study, Golden claimed, "There's not enough Band-Aids in the city of Memphis to fix the holes in the disparity study."

The school board's attorney, Dedrick Brittenum Jr., however, claimed the study was valid. When the school board awarded the contracts, Brittenum said they awarded the contracts to the second-lowest bidders because they were within the allowed 3 percent of the lowest bid.

"These (minority participation) goals are goals," he argued. "They're not requirements."

Despite his ruling, the judge indicated he found it "highly suspect" that the two lowest bidders had little or no minority participation.

School board member Michael Hooks Jr. said he too was disappointed in the judge's ruling. "We're going back to the Stone Ages," he said.

Still, Hooks is optimistic in some ways.

"I want to take this whole issue out of the courtroom and into the conference room and leave the attorneys at home," Hooks said. "The only people that are benefiting from this are the attorneys."

Paul Stanley, executive director of the contractors association, said his organization would be receptive to that.

"We're more than willing to sit down at anytime," Stanley said. "These lawsuits are expensive on us. Our association wants what is fair and equitable and something that we can all live with. I applaud Michael for what he's doing. I wish that had been done a long time ago and we wouldn't be in court today."

Davis Bushnell, Globe Correspondent

The Boston Globe

Copyright 1999

Saturday, March 6, 1999

REAL ESTATE

Minority contractors, long passed over for work, are now hammering away in Boston, particularly in Dorchester and the South End.

That is due, housing and construction specialists say, to a massive infusion of federal money for rebuilding foreclosed apartment buildings in the city.

Since August of 1997, the Massachusetts Housing Finance Agency has awarded 14 construction contracts worth more than $149.7 million for renovating buildings in Boston neighborhoods that eventually will be turned over to tenants. Of that total, $74 million, or 49 percent, has gone to minority-owned firms such as Long Bay Builders, a unit of Long Bay Management and Development Co. of Boston.

MHFA efforts are being funded by the US Department of Housing and Urban Development, under its so-called Demonstration Disposition Program. After the Boston program is completed in two years, $300 million in contracts will have been awarded for upgrading 2,000 apartment units, said Wilson Henderson, director of equal opportunity for the MHFA.

"This HUD-funded project is giving minority contractors what they need: opportunities to bid and work," Henderson said. "And they're proving that they can do the job."

That is so, "but it's still hard for all of us to get quality work," said Ted Webster, owner of Webster Engineering Co. Inc. of Boston, a paving and curbing subcontractor for the work going on in Dorchester and the South End. "Historically, the public sector, by and large, has offered the only real opportunities for us."

And the Boston suburbs, for the most part, remain off limits to minority contractors seeking commercial-industrial work, noted Webster, head of the 25-member Massachusetts chapter of the National Association of Minority Contractors. "In the suburbs, the old-boy network [of developers] is still in control. That's why we have to look for work in the big cities -- Boston, Worcester, Springfield -- where there's public money available."

That dismal picture, however, is slowly changing suggested Ken Guscott, general partner of Long Bay Management and Development and a longtime business leader in Boston's black community. "Lenders are now doing more to see to it that minority contractors will be hired by major companies, which previously had said they couldn't find them. But you still have to make extra efforts to develop capacity, or putting more minority contractors to work."

And Will A. Croom Jr., president of Long Bay Builders, formed three years ago, is doing just that, Guscott said.

One of nine minority contractors hired for the MHFA-HUD program, Long Bay Builders is currently involved in three large Dorchester construction projects. These contracts total $19.4 million.

Next month, the firm will complete the rehabbing of 22 apartment units in a building at Seaver and Maple Streets, near Franklin Park, Croom said, adding that there will be two other construction phases, the last one to be completed in 2000. All told, 99 units will be renovated under the state-federal program.

A 6,800-square-foot addition to a state Department of Transitional Assistance building off Washington Street is expected to be finished in July, said Croom, a registered professional engineer and a licensed construction engineer.

In a joint venture with George B.H. Macomber Co. of Boston, Long Bay is putting the finishing touches to 202 apartment units in the Academy Homes development on Columbus Avenue. The project will be completed in December.

"I'm happy that I've been instrumental in helping a number of minority subcontractors get a foothold in this business," said Croom, a North Carolina native who graduated from North Carolina A & T State University. Before joining up with Guscott, he held management positions with Macomber, Sverdrup Corp., also of Boston, and Bechtel/Parsons Brinckerhoff, the latter in the early stages of Boston's Big Dig.

Now, the goal is to "broaden our area of work by getting other commercial projects in Boston. We don't want to be perceived as just being housing specialists," said Croom, whose firm has 22 full-time employees, all minorities.

"If we can do that," he continued, "then we can get bigger and bring more minorities into the work force, especially those with less than five years' construction experience. These are the people we've been hiring."

Meantime, he's reaping other rewards, he said, from seeing apartment tenants "who are elated that they'll be moving into really nice, rehabbed units."

"Will's been doing a good job in building the business," Guscott said. "He's a real professional who's worked with the 'big boys' downtown," he added, referring to Croom's prior experience with Macomber and Bechtel.

It will take a lot more work, though, to make "all minority contractors more visible in this city," Guscott said.

Daniel G. Fricker

KRTBN Knight-Ridder Tribune Business News: Detroit Free Press

Copyright (C) 1999 KRTBN Knight Ridder Tribune Business News; Source: World

Reporter (TM)

Wednesday, March 3, 1999

Top corporate executives must take the lead and award more construction contracts to black-owned companies if Detroit is going to emerge from its poverty, said Charlie Beckham, executive director of the African American Association of Business and Contractors.

"The responsibility is really on the CEOs and presidents and the politicians and the directors and the chairpersons to just say, 'This is what we're going to do,' " Beckham said at a Detroit Building Boom II conference last month.

Corporate practices that award most construction contracts to white-owned contractors while requiring a small share go to minority-owned companies are relegating minority-owned companies to permanent subcontractor status, he said.

Corporate policies usually require 10 percent to 25 percent of construction contracts be awarded to minority-owned companies. But black-owned contractors in southeastern Michigan are averaging only 10 percent of the region's $4.5-billion construction boom's contracts, and little of the money is reaching Detroit neighborhoods, he said.

"You can't get there with 10 to 15 percent of projects going to this segment of the community," Beckham said. "You'll never grow the minority business community.

"That guarantees poverty, unemployment and underdevelopment. It's pure, simple economics," said Beckham, who spoke to more than 500 contractors, architects, project owners and stakeholders at the Building Boom II conference Feb. 17 at Cobo Hall.

Later this year, the Associated General Contractors, greater Detroit chapter, will unveil a mentoring program to help emerging minority-owned contractors by pairing them with larger companies in the group's 70-company membership, said John Maas, the group's executive vice president.

"We all need to do a better job in addressing together not divisively, but together, the diversity and inclusive aspects of our industry that Charlie's talk addressed," said Ron Hausmann, vice chairman of Walbridge Aldinger, a Detroit-based contractor that is among the nation's largest.

"I agree with Charlie. I agree that we can come up with solutions that are equitable," he said.

Hausmann, who is chairman of the Associated General Contractors' industry relations committee, said Walbridge Aldinger would not oppose having a contract it might normally receive go instead to a minority-owned company.

"If it was better for the customer, no," he said. "What's better is not always the low bid."

There are up to 150 minority-owned contractors in southeastern Michigan. None has annual revenues of $50 million, although some companies have been in business for 40 years.

By comparison, about a dozen local white-owned contractors have annual revenues topping $50 million a year and two giants, Walbridge Aldinger and Barton Malow, each has annual revenues of more than $700 million.

Beckham used to blame corporate middle management for the dearth of large contracts going to black-owned contractors. Unlike public contracts, the awarding of private contracts often is influenced by business connections, he said.

But the boom-and-bust cycles of the Detroit economy leave little time for systematic changes needed to end exclusionary practices. Instead, corporate leaders must order middle managers to end business as usual and award contracts to black-owned construction businesses, Beckham said.

Exclusion in contracting and other businesses means little money flowing into the black neighborhoods of Detroit, he said.

The city's unemployment rate is twice as high as that in the suburbs and the per capita income is only half as much, Beckham said.

In December, the state registered a 3.8 percent unemployment rate while Detroit's was 5.8 percent, according to the Michigan Jobs Commission.

Beckham mentioned the names of the men who founded Detroit's architectural and construction companies and asked how they differed from the people who head the city's black-owned companies.

"Somebody gave them a chance and an opportunity to grow their business," he said.

Kevin Flynn News Staff Writer

Denver Rocky Mountain News

Copyright 1999

Tuesday, February 9, 1999

Local

Denver's affirmative action program for contractors came under fire in federal court Monday by the plaintiff in a 7-year-old reverse discrimination suit.

The city is defending its program, begun in 1983, to encourage contractors who win city construction jobs to use minority- and female-owned companies as subcontractors.

But an attorney for Concrete Works of Colorado, a Brighton company owned by a white man, showed evidence that minority-owned companies already get a much higher percentage of city business than their numbers in the construction marketplace would indicate.

Cross-examining the city's expert witness Steve Flansburg, who worked on two studies of construction discrimination for Denver, attorney Scott Detamore showed that minority-owned firms got between 11.1 percent and 20.6 percent of Denver's construction dollars.

Flansburg's study in 1995 found that minority-owned construction firms comprised about 9 percent of the metropolitan market.

But City Attorney Dan Muse pointed out that the study found continuing and pervasive discrimination against minority- and female-owned companies.

The 1995 study and another in 1990 found that such firms are infrequently hired or even called upon for prices unless they are needed as part of a program such as Denver's.

"I concluded that the available evidence is the city acted as a passive participant in an industry that practiced racial and gender discrimination," Flansburg said.

Concrete Works sued in January 1992. It had been the low bidder on several curb and gutter replacement jobs for the city, but was disqualified after the affirmative action office concluded the company hadn't made a "good faith effort" to subcontract part of the job to minority firms.

The city's law requires bidders to try to attain a goal – set individually for each contract. Until late last year, the goal had been 16 percent for minority firms and 12 percent for female-owned firms. Because of the new study, the goals have been reduced to 10 percent for each category.

The goals are not hard quotas.

Detamore, an attorney with the Mountain States Legal Foundation, argued that court decisions have limited such programs to curing actual acts of discrimination, and not general discrimination in society. Denver hasn't shown that it discriminated, he said.