Minority and women-owned businesses create jobs, generate taxes, encourage small business innovation, and enhance international competitiveness via the hiring of a diverse workforce - all by entrepreneurs who are role models in their communities and who, once successful, can provide opportunities to move from welfare to work.
A brief review of recent accomplishments of current federal minority and woman-owned business programs attests to their value.
During 1995, for example, while a record amount of contract dollars was awarded to small "disadvantaged" businesses, including a total of $11.2 billion under the Small Business Administration's 8(a) program, only 5.6 percent of total federal procurement dollars was awarded via these programs.
In fiscal 1995, woman-owned firms achieved their highest level of the federal market share - 2.2 percent of prime contracts and an estimated 2.87 percent of subcontracts, worth approximately $3.6 billion and $1.2 billion, respectively, according to the September-October 1996 issue of Minority Business Entrepreneur magazine. More than 220,000 new Hispanic American-owned and 100,000 African American-owned businesses have been created since 1992. These businesses have employed hundreds of thousands of Americans of all racial and ethic backgrounds. In turn, these firms account for millions of new tax dollars for the U.S. Treasury. It is undeniable that these programs have provided opportunities to hundreds of thousands of taxpaying citizens, many of whom were formerly denied opportunities to participate in the commerce of this nation.
Despite the historical and continuing successes of these programs, certain members of Congress have sought to reduce or eliminate minority business programs. Recently, for example, former House Small Business Committee Chairperson Jan Meyers, R-Kan., failed in her efforts to eliminate 8(a) programs through ill-conceived legislation. Other members of Congress have proposed equally short-sighted legislation.
Sen. Christopher Bond, R-Mo., has introduced a Historically Underutilized Business Zone bill, to replace the 8(a) program with one that would limit minority entrepreneurs to operating in ghetto areas and relegate them to low-tech businesses capable only of operating in such economically distressed areas. Clearly, there are reasons why those areas are economically distressed and minority businesses do not need yet another disadvantage to further ensure their programmed failure. Sen. Bond should talk to real-life minority entrepreneurs before he continues to pursue this proposal.
Rep. Charles Canady, R-Fla., has proposed even more draconian legislation to eliminate all federal programs designed to redress the significant adverse impact of discrimination against minorities and women, including procurement programs. During a recent interview I conducted with President Clinton, however, he assured me that if the Congress passed any of these bills, he would veto them.
The Future of Federal Minority Business Programs
Despite protests by the foes of affirmative action, including the assault on those programs by a declining number in Congress, President Clinton has vowed to mend, but not end federal affirmative action programs, which are still needed to pry open the doors of opportunity for minorities and women.
President Clinton, former Sen. William Cohen, R-Maine, who is now secretary of defense, former Republican vice presidential candidate Jack Kemp, retired Gen. Colin Powell, and even House Speaker Newt Gingrich, R-Ga., all speak of the need for inclusionary policies. All of them understand we do not yet have the colorblind society that would make affirmative action unnecessary. These programs remain necessary to combat the legacy of past discrimination, as well as to address current widespread bias.
As the struggle for fairness and inclusion in society continues, minority procurement programs must be strengthened, not eliminated. To this end, the executive and legislative branches should assist minority-owned businesses to gain real, equitable participation in federal and private-sector business opportunities. The federal government should establish a Minority Business Commission, among other things, to study the lack of access to capital by minorities, probably the most significant barrier to minority business development and ultimate success.
The Department of Justice is developing guidelines to reform federal minority procurement programs to comply with the Supreme Court's June 1995 Adarand v. Pena decision. The administration should ensure that these guidelines emphasize programs that enhance the development of strong minority businesses rather than merely insulate the government from lawsuits.
Further, since discrimination in obtaining credit, capital and contracts continues after minority firms graduate from the 8(a) and other federal programs, the government must not be permitted to abandon minority businesses once they do graduate. It must find new and creative ways to assist them to remain viable and to grow into fully productive and contributing members of the mainstream economic system.
Other proposals include: the Mentor-Protégé program, which pairs minority firms with larger minority and non-minority companies; providing business and technical development assistance on a larger scale; a new tax incentive for selling broadcast licenses to legitimate minority-owned businesses; effective enforcement of subcontracting requirements for prime contractors; and increased appointments of minorities sensitive to these concerns at the sub-Cabinet level of the administration. Obviously, a comprehensive program is needed, and I hope Sen. Bond will be open to programs much broader than those limited to distressed areas.
Weldon Latham is a senior partner at Shaw Pittman Potts & Trowbridge. He is a recognized expert in federal procurement, including small, minority and woman-owned business programs.