Minority Contractors Unite to Demand Share of Stimulus Dollars
July 24, 2009
By Aaron Glantz
New America Media
Frustrated by their inability to win construction contracts made available by President Barack Obama’s stimulus package, a new coalition of California’s minority contractors has decided to shift its focus to large engineering firms, which minority contractors accuse of ignoring small businesses.
“We’re sick of hearing the same thing over and over again,” said Ruben Guerra, who chairs the Los Angeles-based Latin Business Association.
Guerra has helped form the California Construction Task Force, which is lead by the Latin Business Association and also includes the California Small Business Association, the California Black Chamber of Commerce, Asian Business Association of Los Angeles, American Indian Chamber of Commerce of California, and the National Federation of Independent Business.
“What’s frustrating about the stimulus package is that there’s no major opportunity for small business owners,” Guerra added, “and a lot of the minority sector is small business owners.”
The American Reinvestment and Recovery Act (ARRA) earmarks approximately $7 billion for California infrastructure projects.
Gov. Arnold Schwarzenegger has announced the first 57 projects in line to receive some of the money, totaling $625 million. Of that amount, a total of $565 million is going toward the State Highway Operations and Protection Program (SHOPP) for projects that include improving highway safety, bridge repair and pavement preservation.
Minority contractors say they’re seeing only a small fraction of the stimulus dollars. Joel Ayala, head of the California Hispanic Chamber of Commerce, told New America Media he was “not aware of a single one of our members who’s received a contract” related to the stimulus package.
It’s a situation that’s particularly frustrating because the stimulus package marks an opportunity to bypass Proposition 209, the 1996 voter-approved initiative that banned affirmative action in California.
Because the Recovery Act dollars are from the federal government, the state must follow federal law when it spends the money. And those federal restrictions include a set-aside for the so-called Disadvantaged Business Enterprises.
The U.S. Department of Transportation normally presumes certain groups including women, African Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian-Pacific Americans to be “disadvantaged.” The federal government requires larger firms, which receive the master, or “prime” contract, to give a percentage of the job to DBE businesses as subcontractors.
In March, however, Caltrans announced it had reached an agreement with the Federal Highway Administration to exclude Hispanic and Subcontinent Asian Pacific American-owned businesses from the DBE set-aside program. In addition, large, prime contractors can get out of the commitment, if they successfully argue that no qualified minority contractor exists.
That’s exactly what’s happening, said Aubrey Stone of the California Black Chamber of Commerce.
“So what we’re trying to do now is create some leverage to make sure we get into the mix,” Stone said.
Repeated calls to Gov. Schwarzenegger’s office to respond to the claim were not returned.
The different minority business councils hope they will be able to gain leverage by working together. They say they will use the new California Construction Task Force to provide lists of qualified small businesses for the larger “prime” firms.
Guerra, of the Latin Business Association, said his coalition would take a carrot and stick approach.
“We’re going to go one by one and they’re going to have to come to the table and give 25 percent to small business,” Guerra said. “If they say you can’t find minority contractors, we’re going to find them for you. If you say you can’t train them, we’ll train them for you.”
“If we eventually have to block these prime contractors from getting a job, that’s something we’re going to have to consider,” he added. “All these are projects that come because of people’s tax money. We want to make sure these dollars are reinvested back into the community.”
In addition, by working together, minority businesses hope they will be able to pull enough capacity together to snare a few prime contracts themselves.
Stone of the California Black Chamber of Commerce cited the Baines Group of Oakland as a potential leader of one of the efforts. The company, which has handled over $800 million in government contracts over its 15-plus-year history, is run by Michael Baines, who preaches the importance of savvy politicking alongside professional project management.
The Baines Group currently has a subcontract handling cost and quality control on San Francisco’s massive Central Subway project.
“I’ve always believed in the political process,” Baines said. “My business’s growth has come out of a situation where I’ve nurtured my relationships with mayors, boards of supervisors and municipal human relations commissions.”
Baines said minority businesses have to be much more aggressive, knocking on doors and supporting their chambers of commerce.
“It all comes down to one thing: politics.”