Minority Businesses Eager for Stimulus Contracts

Vice President Joe Biden announced this week that in the 100-plus days since the administration’s $787 billion, two-year economic stimulus bill was signed by President Barack Obama, $126 billion has been disbursed–and it’s just the beginning of great things to come. In the second hundred days, he said, Americans will begin to really see the stimulus bill at work in their communities.

“Particularly infrastructure stuff,” said Biden in remarks delivered at a business roundtable in New York. He added that the administration has signed off on more than 3,800 projects in every territory and state in the nation. “You don’t see the effect of that yet. That’s the stuff that’s being contracted out,” he said.

And that’s exactly what worries minority business owners who fear that they’ll be bypassed or overlooked when those lucrative contracts are handed out.

Old Habits Die Hard

“New day, same old fight,” says Richard Copeland, president and CEO of Thor Construction, the nation’s largest black-owned construction firm, and president of the National Association of Minority Contractors.

Copeland says that even though his association’s members are being very proactive in seeking contracting opportunities through the recovery act, many are finding the process to be confusing and cumbersome.

“We’re trying to position ourselves to be at the forefront, but how the money moves through the system still remains a mystery,” he explains.

According to Copeland, while some states are more effective at including minority businesses in the process than others, there still appears to be a tendency to give preference to the larger firms with whom procurement officials have worked longest. Sometimes, he said, minority companies are even left out of the bidding process.

“For example, foreclosed or distressed properties are being put in the hands of the traditional power brokers to either manage, demolish, renovate or rent out those properties and by and large they are not businesses of color. We’re fighting to get our fair share,” says Copeland. “Lawmakers are saying trust the process; it’s coming. That’s the story we always get: It’s coming, it’s coming, it’s coming–then, oh, shoot, it’s gone.”

Thor Construction is in the process of negotiating a few deals, but Copeland is concerned about smaller firms that don’t have the same size capacity, capability

and political connections as his. He believes that the federal government should include a mandate that stimulus contracts and funds are distributed equitably among businesses and communities as a condition for receiving funds.

According to Small Business Administration spokesman Michael Stamler, $4.5 billion in contracting dollars have been allocated through the recovery act, of which $513.2 million has gone to small businesses and $346.17 to 599 minority-owned businesses.

In an e-mail message, Stamler wrote, “Keep in mind, the minority-owned category is a completely self-identified field with no certification by anyone and no specific reason for a firm to identify itself as one.”

Rule Breakers Beware

Rep. Ed Towns, who chairs the House oversight and government reform committee, says he’s “concerned and really disappointed” by what he considers the inadequate level of minority business participation in the stimulus process, as well as the fact that large corporations continue to use minority businesses as subcontractors to win awards and then don’t put them to work. His committee is investigating the sham minority business tactic and working with other lawmakers to figure out ways to increase minority participation in recovery act contracts.

“We have to get serious about that because there seems to be no serious recordkeeping on those who violate,” says Towns. “We need them to know that it’s not business as usual and we’re going to do this differently. If they don’t abide by the rules and allow everyone to participate on a level playing field, they’ll be penalized.” Towns plans to appeal to those companies directly, but has not ruled out the possibility of holding hearings on the matter.

Use Your Representative

It’s also widely believed that keeping Capitol Hill lawmakers informed could be advantageous, particularly if your member is actively involved.

Leon Richardson is CEO of ChemicoMays, which is in the unique position of not only being one of few companies in the world that specializes in chemical management, but it is the only minority one to do so. Close to 60% of the work his company does is for the automotive industry, which is one of the economy’s most visible victims. As chairman of the National Association of Black Automotive Suppliers, he’s learning the value of communicating with lawmakers and other government officials.

“It’s very helpful to make them aware of what’s happening with automotive suppliers as a whole and minority suppliers specifically,” says Richardson. “I think the industry and the government were first concerned about the larger suppliers where they could get a bigger bang for most of the employment dollars. They’re now starting to focus on small and minority suppliers who were missed at the very beginning.”

“It helps to have a proactive member working hand in hand with the small businesses to make sure they participate in the recovery act,” says Rep. William “Lacy” Clay, Jr. (D-Mo.), who begins tracking projects in his state as they are announced. He’s asked his regional SBA office to provide a breakdown of minority contracts and has also requested a federal waiver to increase the minority contracting participation for the construction of a new Mississippi River bridge that is being jointly managed by the Missouri and Illinois state transportation departments.

Both Fattah and Towns urge business owners to contact the oversight committee or Biden’s office with any problems they encounter, or feel like “games are being played,” says Towns.