The target is pretty clear: 10 percent of the dollars spent on “any and all” state purchasing, including goods, services and construction projects, as well as contracts funded in whole or part by state funds, must go to minority- and/or woman-owned businesses.
But the closest Rhode Island has come to meeting that goal, figures from the R.I. Minority Business Enterprise Compliance Office show, was 8.96 percent in fiscal 2003, not counting the R.I. Department of Transportation. In the year ending last June 30, only 5.52 percent of state purchasing dollars went to certified minority- or woman-owned businesses.
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The DOT has done somewhat better. Phillip Kydd, assistant director for administration, couldn’t provide year-by-year figures, but he said from fiscal 2000 to 2005, the groups covered by state law got $111 million in DOT contracts, or 11.6 percent of the total.
Companies owned by women and by people of Portuguese origin (also eligible under the law), however, make up the majority of contracts, he said.
For perspective, Latinos, African-Americans, Asian-Americans, Native Americans and Pacific Islanders make up 18.1 percent of Rhode Island’s population, according to the 2000 U.S. Census, and they own about 8 percent of businesses, according to preliminary 2002 Census figures.
But as Charles Newton, administrator of the state minority business office, noted, many minority-owned businesses are in neighborhood retail, dining or services targeted to ethnic communities – not prime candidates for state purchasing.
And Rhode Island’s statistics only count woman- and minority-owned businesses that meet U.S. Small Business Administration standards for “small” concerns, with owners with a net worth less than $750,000 who are also “socially disadvantaged,” further limiting the pool, he said.
Still, given that women own more than one-quarter of Rhode Island businesses, and they count toward the target, the shortfall is inescapable.
“The state of Rhode Island, including DOT, the cities and towns, is in noncompliance,” said Stanford E. Cameron, owner of ATR Building Corp., past president of the Black Contractors Association of Rhode Island, and chairman of the Center to Advance Minority Participation in the Construction Industry. “It’s just an overall failure of the government to make it a priority that the program works.”
To get a contract under the minority enterprise law, businesses must first be certified as a woman- or minority-owned business (or as a disadvantaged business enterprise, for DOT purposes), which includes a financial review and an analysis of who controls the company. Then they have to register as vendors with the state Department of Administration to be able to bid on state contracts. (This isn’t necessary for subcontractors.)
Currently, Newton said, there are about 400 companies certified as minority- or woman-owned businesses, and about 325 are on the state’s vendor list. As of 2002, there were about 7,000 minority-owned businesses and more than 23,000 woman-owned businesses in the state.
Asked why participation isn’t higher, Cameron said many contractors don’t feel it’s worth it.
“There’s no commitment [from the state], so the minority contractors slowly give up on it, and they don’t do any state work or city work,” he said, “because they have to watch the amount of hours and resources they put in pursuing bids.”
Cheryl Watkins Snead, president and CEO of Banneker Industries, a certified minority- and woman-owned business in Lincoln that provides supply-chain services, said the state and federal government “do a tremendous job” of promoting small-business programs, including the minority business enterprise classification.
But getting certified is a difficult process, Snead said, and requires a willingness to expose your personal finances. Not everyone wants to do that, she said.
Newton himself acknowledges that Rhode Island could do better.
“I have no question that there is tremendous room for outreach, and to ensure that people are at least aware of the program,” he said.
