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Minorities, women urge L.A. to share its wealth

Black, Latino and Asian businesses call on the city to steer 35% of its $1.1 billion in annual contracts to them and women-owned firms

November 01, 2010|Cyndia Zwahlen

Local minority businesses are pushing for reforms they say will get more of the Los Angeles city government's $1.1 billion in annual contracts into the hands of such firms and those owned by women and service-disabled military veterans.

A report advocating the reforms "The Case for Minority Business Contracting Reform in the City of Los Angeles," was released Oct. 19 by the Greater Los Angeles African American Chamber of Commerce. It argued that the proposals would contribute to the city's overall economic recovery.

The report called for the city to steer 35% of the contractual funds to small, local businesses owned by racial minorities and women. An additional 8% would go to businesses owned by service-disabled veterans. Minority-owned firms now get 7% of those funds.

The report also recommended appointing a program director to track compliance and called for quarterly progress reports from city departments. Department general managers would be evaluated on how well they meet the goals, if the reforms were adopted.

"It's important that we have some programs with some meat on them," said Gene Hale, chairman of the chamber and president of G&C Equipment Corp. in Gardena.

The Asian Business Assn. and the Latino Business Chamber of Greater Los Angeles both included statements of support in the report, which also called for a disparity study to be done in an effort to prove past discrimination in awarding contracts. Although race, ethnicity and gender-based preferences at public institutions were eliminated in California in 1996 under Proposition 209, disparity studies have been used in some cases to get around that prohibition.

Currently, Los Angeles city departments require prime contractors to make and document a good-faith effort to use women-owned or minority businesses as subcontractors. Some local minority businesses say that has not been effective.

"It has been just an arduous uphill battle trying to get contracts locally," said Candida Mobley, president of Voices Inc., a five-person marketing firm in Los Angeles that has won federal contracts.

But some prime contractors, such as Griffith Inc. in Brea, say it is hard to find qualified small businesses to subcontract the work to, no matter who owns them.

"The government gets it backward," said Jim Waltze, chairman of the 500-person construction company that has several city contracts. "They throw dollars at the problem but don't have the small-business community that has the ability to do that work, so the goals become very hollow."

Small businesses often don't have the financial reserves needed to meet city bonding requirements for public works construction jobs, Waltze said. Also, the businesses sometimes don't meet strict city requirements on environmental practices.

Waltze said he'd like to see more coaching of small firms by bonding companies, lenders and others to help them meet requirements for public contract jobs.

Still, small firms said they have trouble even finding jobs to bid on because the city's several dozen departments often post contract opportunities separately. The small businesses also say that all too often business contracts are awarded based on relationships that deep-pocketed firms have an easier time establishing.

"They all use their existing relationships, or if they take you on, they don't really give you work afterward, in our experience," said Vandana Gupta, chief executive of Ingenious Information Technology, a six-person project management and consulting firm in Arcadia.

Los Angeles Mayor Antonio Villaraigosa, who spoke at the news conference where the contract reform report was unveiled, has promised more transparency in awarding contracts and said his office would complete an executive directive by the end of the year to implement changes to procurement policies.

"This isn't just the right thing to do; it's a smart, business-savvy thing to do in a city that's probably close to 70% of color," Villaraigosa said. "A larger pool of qualified bidders will result in more competitive bidding, and thus the goal is more savings for the city and a recycling of dollars in our community."

He did not specifically endorse the goals in the report.

smallbiz@latimes.com

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(BEGIN TEXT OF INFOBOX)

$1.1 billion

- Annual amount spent by the City of Los Angeles to buy goods and services from outside vendors

7%

- Estimated portion of city contract dollars that now go to minority-owned businesses

35%

- The portion of city contract funds that minority businesses say should go to small, local disadvantaged businesses.

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Source: City of Los Angeles; ?The Case for Minority Business Contracting Reform in the City of Los Angeles? report released October 19, 2010

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