By Tammy Ruhle, On-line Forty-Niner
May 15, 1997
As a jerry-rigged version of affirmative action, Minority, Women and Disabled Business Enteprises has caused confusion and cost vendors who bid on Cal State University Long Beach projects.
In 1988, the California Legislature and then-Gov. Deukmejian ushered in the most extensive legislation impacting the awarding of state contracts.
Section 10115.2 of the California Public Contract Code says state contracts must follow a format that "shall consider the efforts of a bidder to meet minority business enterprises, women business enterprises and disabled veteran enterprise goals set forth in this article."
Many vendors say they are frustrated by the resulting difficulty of what they term as quotas.
"It's just a fiasco," said David Cook, Excel Paving estimator and former CSULB vendor. "There is a negative impact because there are no legitimate disabled American veteran businesses, which makes it difficult to meet the MBE/WBE requirements."
Elizabeth Beall, CSULB purchasing manager, insists this is not the case.
"There are no quotas or set asides," Beall said. "Instead, we have goals. Of the business we contract out, we hope to contract or subcontract out 15 percent with minority business, 5 percent with female business and 3 percent with disabled veteran [business]."
Beall said vendors qualify based on the percentage of ownership and with certain exceptions, such as with proprietary software.
State representatives offered a solution to the limited selection of minority-owned businesses - a loophole called a good faith effort.
"Even though another company meets all the [requirements for MBE/WBE], if you made a documented good faith effort and had the lowest bid, I would award the bid to you," Beall said.
But vendors find the loophole little consolation.
"The project is compromised because it adds cost to the work," Cook said. "Also, a good faith effort costs $500. To comply, we have to advertise in two construction trade magazines. It takes hours of employee time to make phone calls trying to find [MBE/WBE] businesses."
Still, purchasing representatives note that concessions are made for bidding vendors in the event of special circumstances.
"If there is not enough time for [bidding vendors] to do what we call a bonafide good faith effort, we may waive the advertising requirement," Beall said.
Vendors are not comforted by the occasional exemption. Meeting the terms of the quota programs, as well as filling out the extensive and complex MBE/WBE and Good Faith Effort forms, typically deflates enthusiasm to do business with CSULB.
"The risk [compared to the] reward is not there," Cook said. "I don't feel legitimate companies are on a level playing field. Affirmative action benefits the community by setting realistic goals. But, the [MBE/WBE] only adds to cost and adds to aggravation by making the process difficult."
Cook is not alone in his opinion against the government apportionment contracting provisions.
In a recent survey by the Construction Industry Research Board, nearly 61 percent of prime contractors reported that they avoided bidding an average of 6.8 contracts in 1985 because of special preference program requirements, resulting in 12.9 percent fewer bids.
Additionally, nearly 46 percent of majority subcontractors reported that they avoided bidding special preference work an average of 26.4 times each in the prior year. Nearly half of all majority subcontractors reduced the amount of public contract work they bid.