City officials are in the process of awarding around $150 million in new construction projects, and black contractors want a piece of the action--in fact, they're entitled to it by federal law. But year after year they never receive the percentage of contracts the city is required to award them. For instance, from 1994 to 1996, African Americans represented 4.76 percent of available firms, but received only .33 percent of "construction prime contract dollars" and just 3.16 percent of subcontractor dollars. Although the city talks a big talk about fixing that disparity, black contractors say they are currently stonewalling proposals that would help black- and women-owned companies get in on construction projects.
Everyone agrees that one of the main obstacles to getting more women- and minority-owned contractors on construction jobs is insurance. Insurance companies broker a bond to assume liability for city construction projects, so if the job gets botched, the insurance company takes the hit instead of the taxpayers. It's hard for fledgling women- and minority-owned contractors to get those bonds, because their companies are typically small and they haven't been around long enough to establish credit. "It's like the idea that you can't get a job without experience, but you need a job to get experience. In the real world you'd get a foot in the door on a little job--but the problem is, in construction there are no small jobs," says John Johnson, founder of FOUNDATIONS, a national company that issues bonds to "disadvantaged businesses enterprises," typically women-and minority-owned.
Last month FOUNDATIONS was invited by the Pacific Northwest Chapter of the Black Chamber of Commerce to make a presentation to the city of Seattle. They proposed a way to offer insurance to difficult-to-bond minority companies, but they haven't heard anything back.
FOUNDATIONS (believe it or not, this is an acronym; we'll spare you the full spelling) has worked in 42 other cities in the last three years, providing bonds, technical assistance, and training to women- and minority-owned companies. They've never worked in Seattle because, Johnson says, "There's never been interest. Some cities are naive and they don't think they have a problem."
City officials say they aren't naive about the problem. Rob Brandon, the head of the city's contracting department, said providing bonding to disadvantaged companies is a priority here. He points to the minutes of a March conference about how to keep minority- and women-owned businesses afloat after the passage of the anti-affirmative action initiative I-200. "The people clearly said they need bonding agencies, and we are working on it and very committed to it," he says.
He says the city thought FOUNDATIONS' proposal "looked good," and is considering whether to investigate other ways to accomplish the same goals. "We're looking to see who else is out there, if other companies are more competitive, and if we should develop a program in conjunction with the county."
Shopping around for the best insurance company sounds like pretty good reason to hold off on signing a contract with FOUNDATIONS, but it doesn't cut the mustard for Charles Horne, owner of Pacific Rim Construction Company and a member of the Black Chamber of Commerce. "That's a bunch of hogwash as far as I'm concerned," he says. "It's a smoke screen. This happens all the time when people bring a creative program to the city--they stonewall and procrastinate."
Horne speaks from experience. A year and a half ago, he proposed a bonding program to the city. Officials said they wanted to open it up to competitive bidding, but after reviewing the bids for a year, holding meetings and conferences, they just dropped it.
The process of soliciting bids from other insurance companies takes at least half a year, usually longer. By the time the process is completed, the cash for this year's contracts will be gone. "It will set minority contractors back a year and a half. The money for contracting this season will be exhausted," Horne said.
The city is allowed to negotiate a bid without engaging in a lengthy solicitation process. Horne says, "If they were serious about dealing with the bonding problem, that's what they would do."
Brandon says his agency isn't stonewalling black contractors. "Since I-200, the need for bonding agencies is much more visible. We know we have to do more things to keep those firms competing. It's on my radar screen."