"The existence of a paper-shuffling loophole allows many vendors to ignore the intent behind the program," the Little Hoover report said.
Paul Guerrero, a Latino who founded Andero Construction Co. in San Jose, confirmed the commission's finding. He said minority businesses are flooded with calls from contractors who have no intention of hiring them but merely want to show that they made the required good-faith effort.
"The other thing that you get is letters requesting subcontract bids," he said. "But they're not even from the contractor--they're from Joe Letter Factory who guarantees the contractor that for a price he can take care of good-faith requirements for him."
White contractors, on the other hand, say competition often forces them to simply document good-faith efforts rather than to actually meet goals.
Because it is more costly to seek out and hire minority and women contractors, say white business operators, the company that meets goals is forced to swallow a bigger expense than competitors who simply go through the motions of good-faith efforts.
"What it does, it puts hard-working companies that are going out of their way to achieve these goals . . . at a disadvantage," computer executive James Waterman told the Little Hoover Commission.
Operators of minority and women businesses complain that white contractors sometimes list their companies as subcontractors on bid documents, but that they are subsequently cut out of the jobs.
Juarez, former small-business official in the Los Angeles mayor's office, testified at a Cordoba hearing that sometimes minority and women contractors are not even aware that they have been listed on bid documents.
"In one case," he said, "I was at a cocktail party, I said [to a Hispanic contractor], 'Congratulations. I heard you were on the list.' And the guy said, 'That's news to me.' "
Impact on Businesses
Despite the frustrations with affirmative action, many of the business people who have prospered under the program say it would be a mistake to scuttle the effort.
"We [black businesses] usually get less than 1% [of state contracts], but we'd rather have the program the way it is with three wheels on the wagon than no wheels on the wagon," said Ezekiel Patten Jr., a former chairman of the Black Business Assn. and owner of Patten Energy Enterprises, a Sun Valley oil distributor.
Initially, large contractors sought him out as a subcontractor, Patten said, only because they saw his business as an avenue to fulfill affirmative action requirements. But once they learned that his company could do a good job, he said, some have come back to do business even when they didn't need affirmative action points.
"Relationships are built up now," he said. "Now, we're business people doing a job rather than a white guy and a black guy."
But across the state a core of angry white businessmen believe affirmative action has fostered a new kind of discrimination, aimed directly at them. They say that large contractors, pressed to meet affirmative action goals, are increasingly giving minority- and women-owned enterprises the business that once went to white-male-owned companies.
Phillip R. Fowler, a vice president of Fontana Steel in Rancho Cucamonga, wants to eliminate affirmative action because he believes it is killing his company.
Fontana Steel is owned by Paul Ware, an octogenarian who started the company half a century ago. By the 1980s, the company had $50 million a year in sales and 500 workers.
But Fowler said sales have dropped to about $22 million a year and the staff has plunged to 120. He blames affirmative action for most of the decline.
He said big construction contractors have discovered that of all their potential subcontractors, only the steel suppliers have a large number of minority-owned companies. So, he said, they increasingly hire these firms, not Fontana Steel.
"We've had opportunities just taken away from us because of one person in our company who happens to be a white male and that's the owner," he said.
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About this Series
* In this series: The Times examines affirmative action, a policy that has left its imprint on the workplace and college campuses over the last 30 years. With some now questioning whether giving preferences to minorities has been fair to all, this series, which will appear periodically throughout 1995, will measure its impact on American institutions, ideas and attitudes.
* Previously: Why affirmative action became an issue in 1995, its legal underpinnings, its impact on presidential politics, the difficulties of defining a minority, the views of its beneficiaries, a Times poll showing ambivalent attitudes on the issue, how informal preferences have molded American life, the mind at work in racial stereotyping, the evolution of diversity programs in the workplace, affirmative action in sports and recruiting minorities.