Governor asks more set-asides

THE BALTIMORE SUN

Bucking a national tide that is threatening to sweep affirmative action programs off the books, Gov. Parris N. Glendening has asked Maryland's General Assembly to nearly double the amount of state business earmarked for minority-owned firms.

He wants to increase from 10 percent to 18 percent the amount of goods and services the state must attempt to buy from businesses owned by blacks, women and other minorities. Though described in state law only as a "goal," contractors must demonstrate good faith efforts to meet the target and must obtain written waivers from the state if they fail to comply.

"I look at it as an economic development effort," said Mr. Glendening, who was elected with the overwhelming support of the state's black voters. "The more we expand business and employment opportunities, including among minorities, the less problems we're going to have in terms of social programs and welfare and so on."

But critics call such programs "welfare for business" and say government should not be interfering with the free market system.

Edward G. Marks, spokesman for the 1,400-member Associated Builders and Contractors, said his group "does not support economic equality, [it] supports economic opportunity. We believe everybody should be allowed the same opportunity to compete and to succeed in our society."

The governor's effort not only to expand, but to continue for another five years the state's Minority Business Enterprise (MBE) program has set off an emotional debate in Annapolis, one with racial overtones, allegations of political threats and dire predictions of what will happen to the state's African-American community if the bill dies.

If that happens, the state's 17-year-old MBE program would simply go out of existence June 30.

The legislation, which will be aired before House and Senate committees Thursday, has brought into focus the same fundamental question that is being debated in Congress: Should government guarantee a piece of the economic pie to certain segments of society?

The governor, the Maryland legislative Black Caucus and other supporters of the measure say discrimination against companies owned by blacks, Hispanics, women, Native Americans and other minorities will continue unabated without increased government intervention and vigilance.

"There is no greater issue in the African-American business community than this issue," said Del. Elijah E. Cummings, a black lawyer from Baltimore and speaker pro tem of the House.

The prosperity of black businesses and that of black communities are inextricably linked, said Del. Joanne C. Benson, a Prince George's County educator who chairs the Black Caucus.

Called a crutch

But many white contractors, free enterprise conservatives and other opponents question the wisdom of continuing and expanding a program they say was intended as a temporary help, but which they believe has become a permanent crutch.

"I was a firm, firm backer of affirmative action," said House Minority Leader Robert H. Kittleman, a Howard County Republican. "I felt [discrimination] was cultural. We had to do something to break it. There was no other way to do it. But now it has sort of run its course."

Opponents concede that minority firms have undoubtedly obtained more work than they would have otherwise because of the MBE program. But they say the program has created an underclass of minority subcontractors who are incapable of competing for the more lucrative prime contracts.

Contractors and others opposed to increasing the minority business goals say there are other, more meaningful steps the state could take to help minority businesses. They say the state could, for instance, raise the $50,000 per project threshold for when companies must buy performance bonds.

They also have proposed outreach or "mentor" programs through which minority firms would learn the ropes by being teamed with more established majority-owned firms.

Cash flow is another problem often faced by undercapitalized minority firms, and making more money available through state loan programs could help, contractors say.

As it is now, some contractors complain they are often forced to reject lower bids from nonminority firms in order to satisfy the state's goal.

"It's not American," said David Bramble, who runs a paving and road reconstruction company that operates primarily on the Eastern Shore.

Mr. Bramble said that in some areas, there are not always enough certified minority firms that specialize in the types of work that a prime contractor may need.

If the state concludes that a contractor has not made a good faith effort to meet the minority goals, it can deny a waiver and send the contractor back for a timely and expensive second search. Contractors say all the red tape and paperwork simply discourages some competent businesses from seeking state work.

Those that do, they say, find they have to increase their bids -- and ultimately the cost to taxpayers -- to cover the time and trouble it takes to comply.

"I don't want to play this game. I don't want to fill out all the paperwork," said Patricia Powell, owner of a small Hagerstown asbestos removal company.

Although Mrs. Powell's firm could be certified as a minority business because she is a woman, she has resisted doing so. "I want to succeed because I'm good, not because I'm a minority business," she said.

Future in question

The future of programs such as Maryland's has been in question ever since the Supreme Court overturned a Richmond, Va., minority business program in January 1989. The so-called Croson decision held that such programs should be narrowly tailored to remedy the effects of past discrimination.

To prevent Maryland's program from being declared invalid, Gov. William Donald Schaefer found himself in the uncomfortable position of authorizing a $750,000 study of the marketplace to determine if state agencies still were discriminating against minorities in awarding contracts. Absent such evidence, Maryland's program was vulnerable to court challenge.

Grudgingly, Mr. Schaefer and the Board of Public Works approved a study by National Economic Research Associates, which concluded that businesses owned by blacks, Native Americans, Asians and Hispanics remained "under-utilized" in the awarding of state contracts.

The study, which was based on census data collected in 1987, concluded that the minority share of state contracts should average at least 18 percent. For construction contracts, the goal was further subdivided to recommend that an average of 13 percent be awarded to blacks and other minorities and 5 percent to firms owned by women.

To illustrate the amount of money up for grabs, the state in 1993 awarded more than $2 billion in contracts. About 11 percent -- $223 million -- went to certified minority businesses. The share increased to 13 percent last year.

Richard Montgomery, a lobbyist for Mr. Glendening, is telling lawmakers the legislation must use the percentages contained in the study or the state program will be just as vulnerable to legal attack as if the old one still existed.

The MBE issue has so inflamed the passions of black legislators that some apparently have threatened to vote as a bloc in an effort to kill unrelated bills advanced by lobbyists who even suggest that the minority business legislation be amended.

Delegate Benson, the Black Caucus leader, said she would not characterize the comments as threats.

"What we did was say to them is, 'We view [the bill] as a priority. And because it is a priority for the Maryland legislative Black Caucus, we're asking you to work with us, just as you ask us to work with you on a number of bills that are very important to you.'

" 'Now, if you're unwilling to work with us on this bill, it just seems very logical that we are not willing to work with you on your bills.' "

The perceived threat has been so great that one lobbyist, J. William Pitcher, stopped representing the Maryland Highway Contractors Association on the issue. He has represented the association on MBE and other matters for the past 12 years.

"People's emotions and tempers are getting out of the ordinary," Mr. Pitcher said.

'Alternative to drugs'

For one young minority contractor in Baltimore, the importance of TTC continuing the Minority Business Enterprise program is a matter of basic survival for her community.

"Today's youth have no fear, and they have weapons. If the [economic] situation doesn't change, if we don't do anything positive, there's going to be a revolution," said Grace Blackstone, owner of A&G; Cleaning.

"I'd rather have a legitimate business and be able to support ourselves than have drug dealers out there dangling gold carrots to the Baltimore youth," she said. "The MBE program is an alternative to drugs for the minority communities."

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