Minority contracts facing cuts


In the wake of a federal judge ruling Baltimore's minority contracting law unconstitutional, Mayor Martin O' Malley is proposing legislation that would sharply reduce the percentage of city contracts that go to minority- and woman-owned businesses.

The measure would reduce the percentage of contracts required to go to African-American businesses from 20 percent to 14 percent on construction projects and as low as zero on service contracts.

U.S. District Judge Andre M. Davis struck down the city law in December, saying the city failed to meet a requirement to periodically update statistics showing a disparity in the amount of work Baltimore awards to minority- and woman-owned companies.

City Solicitor Thurman W. Zollicoffer Jr., who drafted the new proposal, said the administration isn't happy about being forced by the courts to rewrite the law.

City African-American politicians are upset that the administration proposes reducing minority contract requirements as a way to address the ruling, in a city where blacks make up 65 percent of the population.

"They need to be higher," said state Sen. Joan Carter Conway, a Northeast Baltimore Democrat who unsuccessfully pushed last year to double the state's minority percentage share to 30 percent. "We're not asking for the world, we just want our fair share."

The latest proposal, based on a model used elsewhere, takes into account the number of minority businesses available to bid on government work. The city is trying to fill the gap between the percentages by creating new race-neutral contracting categories, such as small business, that it hopes will boost minority participation, Zollicoffer said.

The Associated Utility Contractors of Maryland Inc. successfully challenged Baltimore's law in federal court, arguing that its members were being denied city contracts unless they were women or minorities. The suit was one of 22 challenges to minority-contracting laws nationwide.

"The litigation in this arena is prolific, and the law is frowning upon any race-based or gender-based programs," said Zollicoffer, an African-American. "It's very strange that in a city where the minority is the majority, we have to go through these gyrations."

Despite complaints about the proposal, O'Malley said that he is confident the city can improve its record of empowering Baltimore minority firms.

O'Malley said he intends to use the power of his office to ensure minority participation, by interceding at the level where city contracts are awarded, such as the city Board of Estimates and the city's quasi-public economic development arm, the Baltimore Development Corp.

"We're sending out a very strong 'now hear this,'" O'Malley said. "Just because the city elected a white mayor and the judge struck down our law doesn't mean we're shrinking away from affirmative action in public contracting."

The mayor spoke two weeks ago to the Maryland Highway Contractors Association warning them not to seek city contracts without out bringing significant minority partners. That warning has been extended to the BDC board and managers of the city's West Side redevelopment plan.

Lisa M. Harris, an attorney lobbyist representing a Maryland coalition of black and Hispanic contractors, said she believes the mayor is sincere in his effort. Yet without a minority contract strategy on paper, Harris said, minority owners remain distrustful of the city.

Unlike the city's current standard, arbitrarily set two decades ago to ensure that 20 percent of all city contracts would go to minority businesses and 3 percent to women, the new pact splits contracts into four specific spending areas: construction, architectural and engineering, commodities and services.

Within each category, the percentage targets are set for six specific ethnic groups including African-Americans, Hispanic-Americans, Asian-Americans, Native Americans and women.

The largest percentage target in each category is set aside for small businesses, 24 percent in the architectural and engineering area.

The city paid $200,000 to MGT of America for the study of its contracting based on interviews with 63 businesses, a review of city vendor records, city Board of Estimates minutes for the last four years and 15,000 city contractor records.

Despite the city law requiring minority and women participation, the MGT study showed that city contracting continued to benefit "nonminority men."

Under the new proposal, percentages for Hispanic-Americans, Asian-Americans and Native Americans would not exceed 1 percent.

"It's going to be hard to go back and instead of 20 percent, we do 1 percent," Councilwoman Catherine E. Pugh, a West Baltimore Democrat who is vice chairwoman of the council's Labor and Economic Development Subcommittee.

In 1989, the U.S. Supreme Court ruled in a Richmond, Va., case that race-based contracting programs are unconstitutional unless they are narrowly tailored to remedy documented discrimination. The problem with Baltimore's law is that the city failed to meet a requirement that it conduct periodic studies showing that contract discrimination continued, Zollicoffer said.

"It's not a bad ordinance," Zollicoffer said. "It was the implementation."

Other predominantly African-American cities, such as Detroit, have resorted to trying to avoid discrimination lawsuits while attracting strong minority participation by requiring that 30 percent of the contracts go to city businesses.

Minority contractors in Baltimore worry that Baltimore's use of the small business standard as its foundation to empower minority companies won't work.

"The small business program just gets rid of the minority business enterprise," said Calvin Mims, president of Calmi Electrical Co. Inc. and the Maryland Coalition of Minority Business Enterprise. "I think they're just running scared and dropping numbers."

Public comment on the ordinance won't be taken until further council hearings in September.

"What we have to do is draft something that will pass constitutional muster and be inclusive," Zollicoffer said. "It's not going to be easy."

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