Georgia Tech Procurement Assistance Center

  • Home
  • About Us
  • Training
    • Class Registration
    • On-demand Training
  • Useful Links
  • Team Directory
    • Albany Counselor
    • Atlanta Counselors
    • Augusta Counselor
    • Carrollton Counselor
    • Columbus Counselor
    • Gainesville Counselor
    • Savannah Counselor
    • Warner Robins Counselor
  • Directions
    • Atlanta – Training Facility
    • Atlanta – Office
    • Albany
    • Augusta
    • Carrollton
    • Columbus
    • Gainesville
    • Savannah
    • Warner Robins
  • New Client Application
  • Contact Us

Supplier diversity: untapped resource for construction companies

July 4, 2019 By Nancy Cleveland

An effective supplier diversity program can provide multiple benefits for construction companies, including enhanced innovation, profitability, and the ability to attract and retain qualified minority and female employees.

The federal government, state government agencies, and even local governments require companies that do business with them to adopt and implement supplier diversity programs.  Many government contracts impose specific levels of contracting with diverse businesses as a contract requirement.

The definitions of “diverse business” vary from jurisdiction to jurisdiction, and many of the acronyms and names commonly used (e.g., Disadvantaged Business Enterprise or DBE) can have different meanings, depending on the laws and regulations applicable to the specific contracts.  Therefore, contractors must perform due diligence on the supplier diversity requirements whenever they submit a bid or proposal for a government contract.

A growing number of non-governmental owners mandate diverse supplier participation in their projects.  The “Billion Dollar Roundtable” is a group of major U.S. companies that have pledged to spend a minimum of $1 billion a year with diverse suppliers.  Due to their large dollar value, construction projects are a key component of these efforts.  As of May 31, 2019, the Roundtable has 27 members, including some of the biggest companies:  Apple, Boeing, Exelon, and Walmart.  Other companies are following this example.

Continue reading at:  National Law Review

Filed Under: Contracting Tips Tagged With: construction, DBE, diversity, supplier relationships

Governments struggle to root out fake minority contractors

April 6, 2016 By Nancy Cleveland

DBE Fraud HotlineMargie Sollinger knew something wasn’t right about the companies doing business with Portland, Oregon. As the city’s ombudsman, Sollinger had for some time been hearing from business owners about fraud in the city’s minority- and women-owned contracting program. But it wasn’t until she received a specific complaint in 2013 — about a certified minority-owned construction firm doing work for Portland’s housing authority — that she decided to take action. According to the complaint, the firm was merely acting as a pass-through, winning valuable city contracts and then subcontracting the work out to non-minority companies.

Like many cities and states, Portland has a program allowing it to give special consideration to women- and minority-owned companies when handing out government contracts. The goal, of course, is to help support traditionally disadvantaged companies by giving them a leg up. But as Sollinger began to discover, the city wasn’t necessarily helping the firms it thought it was.

When she first started looking into the housing contract complaint, she wasn’t sure where to turn. “As ombudsman, the most I can really do is make recommendations,” she says. “But even still, I reached a lot of dead ends.” According to state law, the city of Portland wasn’t allowed to take action against minority-owned firms it believed to be fraudulent; those complaints had to be referred to the state. But Sollinger says the state Office of Minority, Women and Emerging Small Businesses initially shrugged her off. So she referred the case to the Oregon Department of Justice, where the investigation continued for nearly two years. Ultimately, the contracting firm was forced to relinquish its minority certification and pay $15,000 to the state. State legislators took an interest in the issue, and last year passed legislation allowing all public agencies in the state to conduct their own investigations into future allegations of minority contract fraud.

Keep reading this article at: http://www.governing.com/topics/mgmt/gov-women-minority-contracting.html

Related: http://www.governing.com/columns/col-problem-with-preferential-bids.html

Filed Under: Contracting News Tagged With: abuse, compliance, DBE, discrimination, diversity, DOT, fraud, minority owned business, preference, small business, small disadvantaged business, wosb

Virginia diversity-contract program is faulted

March 31, 2010 By ei2admin

A Virginia program to help small, women and minority firms win state business is largely ineffective at awarding contracts to companies with minority owners.

A key reason: The small-business definition is so broad that 99 percent of businesses in the state qualify.

“When you’re looking at minority business and small business, that’s two different issues on two different fronts,” said Darryl Samuels, executive vice president of the National Association of Minority Contractors. “The minority issue gets diluted.”

In a 2006 executive order, then-Gov. Timothy M. Kaine set a goal that 40 percent of state contracts should go to small, women and minority businesses, known as SWaMs. So far this year, small businesses have gotten 28 percent of the state’s spending, minority businesses 6.25 percent and white women businesses 5 percent.

The intent of the goal was to foster diversity among suppliers. But not everyone thinks it does.

“It is a program from hell,” said A. Hugo Bowers, president of the 48-member Black Business Alliance of Virginia, formed to press for public and private sector diversity. “[State agencies] can meet their SWaM goals and never hire a minority.”

To be considered small in Virginia, under a 2006 law, a business must be independently owned and operated with 250 or fewer employees, or have gross receipts of $10 million or less averaged over three years.

The “or” in the definition is a problem, said Stacy Burrs, former head of minority business enterprise offices for the city of Richmond and Virginia. “You could do $150 million in business as long as you don’t have 250 employees.”

An example: The top vendor awarded contracts under Kaine’s program in 2009 was Maryland-based Scheer Partners Management, which earned $37.02 million from Virginia while a year earlier it formed a $100 million equity investment group with another company. Scheer was classified as a small business and was still able to bid as a SWaM vendor through November.

Also, under reciprocal agreements, firms from other states are eligible to bid for state work, including one that was certified as small despite $9 billion in revenue. The state is barred from releasing the firm’s name because of privacy restrictions.

Of the top 10 SWaM vendors paid in 2009, one was minority — information technology firm KST Data Inc. in Ashburn, which has maintenance and hardware contracts with the Virginia Information Technologies Agency. KST received $15.76 million from the state last year.

The Virginia Department of Minority Business Enterprise certifies SWaM businesses. Of the 18,500 certified vendors, minority businesses make up 31 percent, according to director of operations Angela Chiang.

Despite those numbers, they win far fewer contracts.

“The good old boy network has already taken over the job. Nothing’s left for African-Americans, Asians and Hispanics,” said Tinh D. Phan, chairman of the Virginia Asian Chamber of Commerce and spokesman for the Minority Business Consortium.

Flooding the eligible pool with a large group of small, white businesses results in shallow returns for minority firms that lose out in the numbers game. “We’ve been fighting this thing day in and day out,” Phan said.

“The problem with the commonwealth of Virginia is, small is not really that small,” said Hilloah Reagh Driskill, an American Indian and owner of Brave Electrical Contracting in Norfolk who recently won a contract at Old Dominion University.

“I will never be that big,” she said.

. . .

Why should the state encourage its agencies to do business with small, women and minority firms?

“A lot of times, government work is the first work that [a business can] get,” said attorney Albert W. Thweatt II, who counsels small-business owners and teaches entrepreneurship at Virginia State University.

“If you don’t have access to the government work, you don’t have those things to be more successful in the private sector.”

In his executive order, Kaine wrote: “For Virginia to remain competitive, we must assure that all businesses and owners have an equal opportunity to share in state procurement.”

Diversity programs force governments and corporations to branch out from their normal stable of vendors and can help newer firms get projects, which may lead to better pricing from suppliers. That translates into more money and projects to grow a business, Samuels said.

Once work is flowing, businesses have better chances of getting financing and earning money rather than merely surviving.

It’s one reason supporters say diversity programs are important.

Another factor: the economy.

“Minority-owned businesses are . . . the fastest growing component of all small businesses and are likely to continue to be so into the future,” said Thomas “Danny” Boston, an economics professor at Georgia Tech. “The economic vitality of the nation will become more closely tied to the performance of these businesses.”

Minority businesses are slowly getting a piece of the state action. In 2007, they got 2.6 percent of the state’s total expenditure on contracts. In 2008, they got 5.44 percent and last year, they got 5.41 percent.

“It’s incremental movement,” said Samuel Hayes III, the state’s director of Minority Business Enterprise. “Under the program we have, it’s the best we can do.

“This is a not a gimme program. It is a raceand gender-neutral program.”

It’s not enough, Burrs said. “We have devised solutions that either weren’t going to be effective or were struck down because they were going to be in violation of the Constitution.”

A 1989 U.S. Supreme Court ruling based on a Richmond case bars localities and states from creating minority and gender set-aside programs unless they are narrowly tailored and discrimination has been proven.

Claire Guthrie Gastañaga, who serves on the Virginia Small Business Advisory Board, said one definition for small business covering all industries is not the way to go. She prefers the federal method, which uses industry-specific definitions.

The board is pushing the state to study the composition of small business in Virginia so it can be better defined.

. . .

Sixteen other states have set minority or women-owned business spending goals in line with the Supreme Court ruling.

The goals range from 4 percent of contract spending in Washington state to Maryland’s 25 percent, the highest in the nation, according to a database from the California-based Insight Center for Community Economic Development.

Maryland also separates small-business spending goals from minorityand women-owned firm spending, said Luwanda Jenkins, special secretary in the Governor’s Office of Minority Affairs.

The Supreme Court ruling does not bar a state or local government from creating minorityor gender-based programs, but it does place a heavy burden on justification for the program.

To justify the spending goals, governments use disparity or utilization studies.

Maryland’s current 25 percent goal is based on a 2006 study; minority spending programs have been in place since 1978.

Kaine, who declined to comment for this story, used a 2004 study as justification for his program.

The first part of another study was conducted in 2009 and released in January. It shows firms owned by African-Americans, Hispanics, Asians, Native Americans and nonminority women were nearly universally underused in favor of white male firms.

Gov. Bob McDonnell’s administration is “dissecting” Kaine’s initiative and the 2009 study, said spokeswoman Stacey Johnson. The governor is considering an advisory committee to “come up with effective and legal ways to increase the number of minority-owned firms that do business with the commonwealth.”

The McDonnell administration has not authorized the second part of the 2009 disparity study — the key component in creating minorityor gender-based affirmative-action programs.

Without that, big gains are unlikely, said Burrs, now a management consultant.

The disparity will not be eliminated unless there is more race-conscious or gender-conscious programming, which needs the legal backing of a full study, he said.

Michel Zajur, president and CEO of the Virginia Hispanic Chamber of Commerce, said it’s important that state spending on contracts reflects Virginia’s racial, ethic and gender diversity.

“No one’s asking for handouts or anything,” he said. “These businesses are very well capable of producing. But the way that it’s set up, they need an opportunity to put in bids for contracts. So many times they’re bundled in such big packages.”

King Salim Khalfani, executive director of the Virginia State Conference of the NAACP, said his organization and the Black Business Alliance are seeking a meeting with McDonnell on the issue.

“Race neutral hasn’t worked, and I don’t think it was ever intended to work,” he said. If the McDonnell administration doesn’t fund the next phase of the study, “it does not send a great signal they’re serious about improving the numbers.”

Oliver R. Singleton, president and CEO of the 400-member Metropolitan Business League that promotes small and minority businesses, said a lawsuit may be the only way to prompt change.

Or, Singleton suggests, forget race and make state goals favor local businesses. No high court rulings bar that, and supporting local businesses is all encompassing.

“I don’t believe the rural legislators will ever get on board with any minority goals — not in my lifetime,” he said. “But I do believe the rural legislators will get on board with a local provision.”

__________________________

READ THE ORIGINAL DOCUMENTS
• Supreme Court opinion – City of Richmond v. J.A. Croson Co. 1989
• State procurement disparity studies: 2004 | 2010
• 2006 Executive Order establishing Virginia’s diversity supplier program
• Virginia’s Diversity Expenditure Portal

WHAT’S A SMALL BUSINESS?
In Virginia, “small business” means an independently owned and operated business which, together with affiliates, has: 250 or fewer employees, or $10 million or less in annual gross receipts averaged over the previous three years.

STATE-CONTRACT GOALS
Then: In a 2006 executive order, Gov. Timothy M. Kaine set a goal for 40 percent of state contracts to go to small-, womenand minority-owned businesses.

Now: Gov. Bob McDonnell is now “dissecting” that initiative and considering forming an advisory committee to come up with legal and effective ways to increase minority contracting with Virginia agencies.

– from the Richmond Times-Dispatch – 3/28/2010

Filed Under: Contracting News Tagged With: diparity, diversity, minority owned business, small business, Virginia, woman owned business

Recent Posts

  • Contractors must update EEO poster
  • SBA scorecard shows federal government continues to prioritize small business contracting
  • The risk of organizational conflicts of interest
  • The gap widens between COFC and GAO on late is late rule
  • OMB releases guidance related to small business goals

Popular Topics

8(a) abuse Army bid protest budget budget cuts certification construction contract awards contracting opportunities cybersecurity DoD DOJ False Claims Act FAR federal contracting federal contracts fraud GAO Georgia Tech government contracting government contract training government trends GSA GSA Schedule GTPAC HUBZone innovation IT Justice Dept. marketing NDAA OMB SBA SDVOSB set-aside small business small business goals spending subcontracting technology VA veteran owned business VOSB wosb

Contracting News

SBA scorecard shows federal government continues to prioritize small business contracting

OMB releases guidance related to small business goals

OMB issues guidance on impact of injunction on government contractor vaccine mandate

Changes coming to DOD’s Cybersecurity Maturity Model Certification under CMMC 2.0

Judge issues nationwide injunction halting enforcement of COVID-19 vaccine mandate

Read More

Contracting Tips

Contractors must update EEO poster

The risk of organizational conflicts of interest

The gap widens between COFC and GAO on late is late rule

Are verbal agreements good enough for government contractors?

CMMC 2.0 simplifies requirements but raises risks for government contractors

Read More

GTPAC News

VA direct access program events in 2022

Sandia National Laboratories seeks small business suppliers

Navy OSBP hosting DCAA overview (part 2) event Jan. 12, 2022

Navy OSBP hosting cybersecurity “ask me anything” event Dec. 16th

State of Georgia hosting supplier systems training on January 26, 2022

Read More

Georgia Tech News

Undergraduate enrollment growth reflects inclusive excellence

Georgia Tech delivers $4 billion in economic impact to the State of Georgia

Georgia Tech awards first round of seed grants to support team-based research

Georgia Tech announces inaugural Associate Vice President of Corporate Engagement

DoD funds Georgia Tech to enhance U.S. hypersonics capabilities

Read More

  • SAM.gov registration is free, and help with SAM is free, too
APTAC RSS Twitter GTPAC - 30th Year of Service

Copyright © 2023 · Georgia Tech - Enterprise Innovation Institute