Stimulus Watch: Less Stimulus for Minority Firms

WASHINGTON (AP) -- Hispanic and Black businesses are receiving a disproportionately small number of federal stimulus contracts, creating a rising chorus of demands for the Obama administration to be more inclusive and more closely track who receives government-financed work.
Latinos and Blacks have faced obstacles to winning government contracts long before the stimulus. They own 6.8 and 5.2 percent of all businesses, respectively, according to census figures. Yet Latino-owned business have received only 1.7 percent of $46 billion in federal stimulus contracts recorded in U.S. government data, and Black-owned businesses have received just 1.1 percent.
That pot of money is just a small fraction of the $862 billion economic stimulus law. Billions more have been given to states, which have used the money to award contracts of their own.
Although states record minority status when they award contracts to businesses, there is no central, consistent or public compilation of that data, according to Laura Barrett, director of the Transportation Equity Network. She and other minority advocates are calling for complete and publicly accessible demographic information on all contracts and jobs financed by the stimulus.
Minority businesses are often too small to compete for projects; do not have access to the necessary capital, equipment or bonding requirements; or lose bids to companies with well-established relationships. There also has been an emphasis on spending stimulus money quickly, which favors businesses that have won past contracts.
But minority advocates say that Blacks and Latinos have been harder hit by the recession, and getting a fair share of stimulus contracts is key to the recovery of these communities. Unemployment among Blacks and Hispanics is much higher than among Whites. And although unemployment among Whites increased at a faster rate during the worst of the recession than among minorities, rates of those considered underemployed -- including people who have given up looking for full-time work or people working part-time because there is no full-time work available -- increased faster among minorities than Whites.
Figures from the Transportation Department on highway stimulus spending -- at the heart of the government's effort to lift the economy -- have further concerned advocacy groups.
Six percent of the $16.9 billion in Federal Highway Administration contract money spent by states has gone to disadvantaged business enterprises, which includes companies owned by minorities as well as women, veterans and the disabled, according to department press secretary Olivia Alair.
Out of $1.1 billion in state-spent Federal Aviation Administration contract money, 7.8 percent has gone to disadvantaged businesses, Alair said, and 8.6 percent of direct Transportation Department contract dollars have gone to those companies.
Alair said some minority companies might not be included in those figures because they are not small businesses or choose not to classify themselves as disadvantaged. Minority businesses also are eligible for stimulus grants, but those are not tracked by race.
Still, "these numbers are far too low, especially when compared with state and federal goals," Barrett said. "The businesses and communities that need federal dollars most are seeing the least."
The Obama administration has taken steps to address minority concerns. Transportation Secretary Ray LaHood wrote governors in December urging them to work with disadvantaged businesses. LaHood suggested unbundling large contracts to make them more accessible to small businesses, and emulating a Missouri contracting project that made community groups and openness part of the process.
LaHood's department has pledged $20 million in subsidies to help disadvantaged businesses pay bonding premiums and fees, and has established a short-term loan program that lent $4.9 million in 2009. Last month, LaHood announced $9.9 million in grants to help businesses owned by minorities and women compete for federal contracts.
Federal agencies held more than 300 events nationwide to educate minority businesses about stimulus opportunities, said White House spokesman Corey Ealons. He also said there is a backlog of awarded contracts that have not yet been entered into the tracking database.
The White House also pointed out that about $21 billion of the $46 billion is guaranteed, and the rest are options. Latino-owned businesses have received 3.7 percent of the guaranteed total, and Black-owned businesses 2.4 percent.
The founder and chief executive of one of the nation's largest Black-owned construction companies, Richard Copeland of THOR Construction Inc., said minority-owned companies usually employ 60 percent minorities.
"If we can't get on these jobs," he said, "we can't hire our people from our community, so poverty and drugs and crime and unemployment and welfare become habitual." His company has done a small amount of weatherization work through Minnesota stimulus contracts.
He said many minority businesses can't develop the capability to do government work because a "good old boy" network shuts them out of contracts.
Copeland's company has its headquarters in Minneapolis, and has 200 full-time employees and offices in Los Angeles, Las Vegas, New Orleans and Atlanta. He said he abandoned highway work years ago to focus on erecting buildings.
"These big highway contractors try to keep you off the project, and when you get on, they try to make sure you don't come back," he said. "We hear about this all across the country."
That's what Samuel Foley Jr., a lawyer for the Black-owned construction company Holley Enterprises, says happened to his client.
Holley was subcontracted by James J. Anderson Construction to perform demolition and salvage operations on a subway station repair project in Philadelphia. This enabled Anderson to meet contract guidelines for minority participation, but about two months later Holley's contract was unfairly terminated, Foley said.
Anderson Construction said in a statement that Holley violated the terms of the contract. Anderson said it did not perform any of the work itself and gave the contract to another disadvantaged business.
Foley, chairman of the National Black Chamber of Commerce Construction Committee, said many companies "play games to get rid of the minority contractor."
"This is not a unique situation," he said. "For the past 30 years in Philadelphia it's been this way."