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Utility contracting drops among firms with diverse ownership

Maryland utilities participating in a voluntary program that encourages the use of suppliers owned by minorities, women or disabled veterans spent 11 percent less on contracts with such businesses last year even as total contracting grew modestly.

The figures, released Tuesday by the state Public Service Commission, struck an off note in an otherwise celebratory commission hearing that marked the 20th anniversary of supplier diversity efforts.

About $345 million of participating utilities' contracting dollars flowed to companies owned by minorities, women or service-disabled veterans last year. That was down from $388 million the year before and not quite 14 percent of total spending, far below the 25 percent target set by the commission.

Total contracting rose 2.7 percent last year.

"It was shocking and deflating to learn that as a group ... the utilities underperformed from 2011 to 2012," said Wayne R. Frazier Sr., president of the Maryland Washington Minority Companies Association. "Utilities, I beg you, please prove that ... 2012 was just a one-year setback and not the new norm."

Utilities told the commission that they are working together to identify diverse contractors. Pepco's Rhonda Mencarini said some of the utility industry's go-to companies have been acquired by firms that are not owned by minorities, women or disabled veterans.

"I think you're going to see those ups and downs, and all we can do as a group is keep forging ahead," said Mencarini, Pepco's manager of supplier diversity.

Frazier said utility contracting is a tough business to break into. He encouraged utilities to offer training for subcontractors and potential suppliers to create "their own feeder program" — and better understand the skills those companies bring to the table.

He pointed to Baltimore Gas and Electric Co. as an example. The company is collaborating with Frazier's association on a subcontractor training program that launched with seven companies this month.

"We're teaching them our system and how to work within our system," said Calvin Butler Jr., BGE's senior vice president of regulatory and external affairs.

BGE, the state's largest energy utility, spent the most on contracts with diverse businesses last year — about $91 million, roughly 14 percent of the company's total.

Some regulated companies with smaller budgets spent a larger percentage on diverse suppliers.

Topping the list was First Transit, which runs the shuttle bus service at Baltimore-Washington International Thurgood Marshall Airport. State regulators said the company spent about 31 percent of its $14.6 million procurement budget on contracts with diverse-ownership firms.

The Association of Maryland Pilots was close behind, with nearly 31 percent of its $749,000 budget going to diverse firms.

Several companies told the Public Service Commission that supplier-diversity efforts have had an impact.

"It's a tangible difference I've seen over the years," said Ward Tucker, president and founder of Tucker Construction Group, an Odenton-based underground utility company.

He said it used to be "very, very difficult" to get opportunities to work for utilities, either directly or as a subcontractor. Now he's a prime contractor for BGE. Some of the prime contractors who didn't give him a chance before are working as his subcontractors and seeing firsthand what his employees can do, he said.

"It's just given us an opportunity to prove that we're just as good as they are, better in some cases," Tucker said.

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