State procurement contracting with minority-owned businesses has risen in recent years, but spending levels are still far below the legal minimum and the Strickland Administration is pressuring agencies to do more.
In fiscal year 2009 cabinet agencies increased spending on firms participating in the Minority Business Enterprise and Encouraging Diversity, Growth and Equity programs by $94 million over the previous year, according to the most recent MBE/EDGE annual scorecard.
Nonetheless, only one cabinet-level agency, the Department of Taxation, met the MBE set-aside requirement in the law for 15% of total procurement spending go to firms owned and controlled by African Americans, Latinos, Asians, and Native Americans. Cabinet agencies directed about $43 million, or 4.3% of their spending on goods and services to MBE firms in FY 2009, an increase from $26 million the prior year.
Department of Administrative Services spokesman Ron Sylvester said the Governor’s Office has lately been taking an aggressive role in getting agencies to comply with the MBE law and EDGE goals.
“If you’re not making progress and you’re an agency director, you will find yourself in a meeting at the Governor’s Office explaining what your plan is to meet the letter of the law and get your numbers up,” he said.
“The fact is both of these programs are state law and have been for many years and the Strickland Administration is doing everything it can to adhere to the law,” he said.
Cabinet agency spending on EDGE-certified companies increased 4.3% from FY 2008 to $134 million in FY 2009, the scorecard says. Participating companies must be owned by “socially and economically disadvantaged” individuals, but unlike MBE, the program is open to all races.
Non-cabinet level agencies doubled MBE expenditures from $1.5 million to $3 million in FY 2009 while EDGE spending held steady at $9 million. State colleges and universities totaled $47 million in MBE and $26 million in EDGE.
A federal court struck down state set-asides for construction contracts in 1998, but the Ohio Supreme Court subsequently upheld similar quotas for the procurement of goods and services.
While there is still has a long way to go to meet the state’s diversity goals, the procurement spending increase represents a departure from previous administrations, Mr. Sylvester said.
“For many years there was not a lot of attention paid to being compliant with the MBE law, in particular,” he said. “We’ve moved the ball on that account.”
Gov. Strickland signed a 2008 executive order aimed at boosting participation rates of minority-owned businesses as part of an effort to increase state spending on Ohio-based companies.
Rep. Sandra Williams (D-Cleveland), president of the Ohio Legislative Black Caucus, said the administration’s efforts to boost minority business spending are proving effective.
“We want to congratulate governor for trying to take on this endeavor to begin to comply with this law that’s been in place for almost 20 years,” she said. “We definitely believe it’s an improvement over the 2008 scorecard, but I would not classify it as success until they reach that 15%.”
The administration has been working with OLBC and community groups on outreach efforts in the major metropolitan areas, she said. “So they have been doing their due diligence. But the goal is to get it done. And it’s not good enough until it’s done.”
Mr. Sylvester said low MBE and EDGE participation rates were due in some cases to a lack of certified businesses capable of providing the required goods and services.
The administration has worked to increase the number of registered MBE and EDGE businesses, he said, noting the two-part process involves getting certified and then registering with the Office of State Procurement to get information about bidding opportunities.
“DAS has been working really hard with the businesses to get them to do both steps of the process,” he said, noting the biennial budget increased funding for DAS’s Equal Opportunity Division to hire an MBE/EDGE outreach coordinator and upgrade computer systems to improve tracking and communication within the programs.
Census Bureau: The number of minority-owned businesses in the U.S. increased by 45.6% to 5.8 million between 2002 and 2007, more than twice the national rate for all businesses, the U.S. Census Bureau reported this week. The number of women-owned businesses also increased 20.1% during the same period.
The total number of U.S. businesses increased by 18% to 27.1 million between 2002 and 2007, the agency said.
Receipts of minority-owned businesses rose 55.6% during the five-year period percent to $1.0 trillion, the bureau said. Receipts of all U.S. businesses increased by 33.5% to $30.2 trillion.