July 19, 2012

Minority business participation in state contracts peaks, but advocates say numbers are skewed

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Wayne Frazier

Wayne Frazier

By Dana Amihere
dana@marylandreporter.com

Minority business participation in state contracts last year reached its highest level since the program began in 1978, a Governor’s Office of Minority Affairs report said.

Minority business enterprises (MBE) made up 24% of state procurement awards in FY 2011 and were given $1.6 billion worth of business, an 18% increase from FY 2010. The goal for the agencies has been 25% MBE participation in state contracts.

But Maryland-Washington Minority Contractors Association President Wayne Frazier, Sr. says that the numbers are skewed by nonprofits’ inclusion as MBEs under preference procurement. According to a 2010 GOMA annual report, nonprofits were awarded more than $226 million –– more than that awarded to blacks, Asians, Hispanics and Native Americans combined.

Misleading data?

“We’re a point away from meeting 25%,” Frazier said. “But really that’s not true because nonprofits don’t belong. They’re  more concerned [in the O’Malley administration] with meeting their overall goal than in individual agencies that may not be doing as well.”

The Department of Budget and Management, the military, the Executive Department, the Board of Public Works and the Comptroller’s Office have some of the lowest MBE participation rates, aside from agencies that didn’t spend any money on procurements in some years or for which data isn’t complete. The Treasurer’s Office alone fell more than 40% to less than 1% participation from 2010-2012, GOMA data said.

If nonprofits were removed from the MBE program, Frazier said, MBE participation would look more like 15%. With a clearer picture of MBE spending, the state would be “hard-pressed to move stronger on agencies who aren’t doing well and push those teetering along to do even better.”

Del. Barbara Robinson

Del. Barbara Robinson

Del. Barbara Robinson, D-Baltimore City, one of Baltimore Mayor Stephanie Rawlings-Blake’s new minority business advisory council members, agreed that the reporting system for MBE participation needs work.

There are no statistics or data on how MBEs operate within certain fields such as the health care industry, Robinson said. If there were, procurements such as January’s $64 million janitorial contract for the nonprofit Chimes wouldn’t be looked at as a “drop in the bucket” for MBEs struggling to compete for contracts.

“Minority businesses have to pay taxes and nonprofits don’t,” Robinson said. Moreover, MBEs have to contend with overhead expenses and aren’t eligible for grants or preference procurements.

“An ‘A’ for effort”

HB 1370, which took effect July 1, requires the state to set overall MBE goals every two years and to set individual subgoals on every contract, rather than set the goals in law.

Frazier said that the state, namely the Maryland Transportation Department and Governor’s Office of Minority Affairs responsible for its implementation, isn’t in a position to move forward just yet.

“I give them an ‘A’ for effort in all of this…but they don’t have it together enough to begin to set goals,” he said. “It’s not a criticism, but it all happened so rapidly that they haven’t had time to wrap their hands around it yet.”

  • rclegg

    Why do race, ethnicity, and sex need to be considered at all
    in deciding who gets awarded a contract? 
    It’s good to make sure contracting programs are open to all, that
    bidding opportunities are widely publicized beforehand, and that no one gets
    discriminated against because of skin color, national origin, or sex.  But that means no preferences because of skin
    color, etc. either–whether it’s labeled a “set-aside,” a
    “quota,” or a “goal,” since they all end up amounting to
    the same thing.  Such discrimination is
    unfair and divisive; it breeds corruption and otherwise costs the taxpayers and
    businesses money to award a contract to someone other than the lowest bidder;
    and it’s almost always illegal—indeed, unconstitutional—to boot (see 42 U.S.C.
    section 1981 and this model brief: http://www.pacificlegal.org/page.aspx?pid=1342
    ).  Those who insist on engaging in such
    discrimination deserve to be sued, and they will lose.

  • Hungrypirana

    Annapolis needs to update this anacronistic MBE law in at least two respects:

    First, the law needs to require publication of a cost study showing the incremental
    expense of MBE awards over competitive procurements. MBEs typically cost more and the public needs to know how much.

    Second, who is a minority? The law as written pretends the answer is static. That’s wrong. For instance, minorities at
    Bowie State are white. Women are not in the minority, yet they are the
    recipients of 26.18% or the state’s largess (the single largest bloc.) Change the law. Even the playing field.

  • abby_adams

    Could these be the types of businesses POTUS was making reference to given his past experiences?  Prime examples of the government, state & federal, picking winners & losers, not on performance & costs but on other nebulus criteria to level the playing field.