All should help minority firms

THE ISSUE of "set-aside" goals for Minority Business Enterprises (MBE) has received a great deal of attention from state and city leaders in recent weeks.

In January, Gov. Parris N. Glendening announced his intention to seek legislation raising the state's goal for minority contracting from the current 14 percent to 25 percent. In his recent State of the City address, Mayor Martin O'Malley reaffirmed the goal of his administration to award 35 percent of the city's business to MBEs.


Proponents of minority set-aside goals argue that such measures are necessary to level the playing field. They say that non-MBE contractors with whom the government does business don't -- or won't -- seek minority contractors if there are no goals. The facts appear to support this contention.

A state-commissioned study recently found that MBEs account for 26.9 percent of the contractors available, but receive only 17 percent of state business.


A similar study performed by consultants hired by Baltimore City concluded that a "persistent, pervasive and statistically significant" disparity in the city's contracting process by prime contractors has resulted in "significant underutilization" of MBEs.

Opponents of predetermined minority goals, encouraged by the national trend against affirmative action, decry the lack of evidence that such measures are effective in cultivating a strong corps of minority contractors.

Moreover, they argue that set-aside goals result in increased project costs and foster an anti-competitive environment, discouraging new businesses from coming to the state.

New ordinance

Are laws that mandate minority participation goals for public contracts constitutional? Early last year, one trade association mounted a successful challenge to the former Baltimore City ordinance providing for minority set-asides, although that victory was short-lived.

Under the strict scrutiny by which government classifications based upon race and gender are reviewed, the U.S. District Court in Baltimore enjoined the city from enforcing the prior ordinance because of the lack of current statistical evidence showing a disparity in MBE utilization. Armed with a new study containing empirical evidence of discrimination, the City Council recently passed an ordinance empowering the mayor to enforce his 35 percent goal. The new law, which is more narrowly tailored than its predecessor, is much more likely to pass constitutional muster in court.

Opponents of minority participation goals would be better served to devote their resources toward eliminating the need for such programs in the first place, rather than challenging their legality.

In particular, majority-owned contractors, trade associations and other business groups need to do more to foster the growth of MBEs. In many metropolitan areas, a variety of practices are being used to increase diversity participation. White-owned contractors volunteer to act as mentor-proteges for emerging businesses. Trade associations conduct business courses and sponsor networking sessions for MBEs. Awards and recognition are extended to those businesses that distinguish themselves in minority contracting. Of course, minority-owned businesses must be receptive to such efforts for these programs to be successful.


If the entire business community commits to helping MBEs to thrive and prosper in Baltimore City and throughout Maryland, the need for minority participation goals would be eliminated.

J. Mitchell Kearney is a partner in the Baltimore law firm of Brown, Diffenderffer & Kearney, LLP.