Senate OKs Minority Firms Bill : Companies Would Be Awarded 20% of State Contracts

Far-reaching legislation requiring that 20% of the value of all future state contracts be steered to firms headed by minorities and women was approved by the Senate Monday and sent to the Assembly.

The measure passed on a 25-4 bipartisan vote that contrasted sharply with an intense, months-long debate over affirmative action goals that began last summer.

The legislation for the first time would establish uniform statewide affirmative action goals governing the billions of dollars in state contracts awarded each year. It calls for awarding 15% of all future contracts to minority-owned firms and 5% to businesses headed by women.

Accord With Governor

Deukmejian has told lawmakers privately that he will sign the bill.

The ease with which the measure passed reflected an agreement reached last week between Gov. George Deukmejian and party leaders in the Senate and Assembly on a $5-billion package of housing, school, prison and clean water bonds.

Democrats in the Assembly insisted that the affirmative action policy be included in the agreement on the bonds because of the size and scope of the financial package--a total of $5.6 billion to be borrowed when parks and veterans housing bonds are included.

Assemblywoman Maxine Waters (D-Los Angeles), author of the affirmative action legislation, said during an Appropriations Committee hearing hours before the vote by the full Senate that her bill is necessary to cut a bigger slice of the economic pie for women and minorities.

‘Piece of the Action’

Waters, noting high unemployment in minority communities during a period of economic prosperity, said she felt a sense of desperation because minority advocates had to “fight so hard just to get a little piece of the action.”

“Growing unemployment . . . among (minority) youth between the ages of 18 and 25 is dangerously high. The alienation at this point in time is more than I’ve seen since the 1960s,” Waters said just before the committee approved the bill 8 to 0.

State Sen. Daniel E. Boatwright (D-Concord) complained during the hearing that minorities represent less than 3% of the workers on a state freeway construction project going through Richmond, which is in his district. He called that “atrocious.”

“(The population of) Richmond approaches or exceeds 50% minorities and their unemployment rate for young male blacks has in the past approached 50% for those between 18 and 25,” Boatwright said.

The legislator said blacks “just aren’t getting a piece of the pie.”

The legislation would not automatically guarantee more jobs for blacks and other minorities since it is aimed at giving more state contracts to minority- and women-owned businesses. These firms would be free to hire anyone they want.

Currently, the departments of Transportation and Corrections have affirmative action programs aimed at awarding 13% of their contracts to firms headed by minorities and 3% to companies headed by women.

During the state’s limited experience with the program, there have been complaints that some white businessmen have tried to exploit the affirmative action goals by setting up sham corporations and putting their wives or minority partners in charge in order to gain an advantage in bidding for highway or prison construction jobs.

There also have been complaints that the state has not provided adequate training support for minority firms seeking to capitalize on the affirmative action contracting program. Waters’ bill does not contain any new funds to provide such training but does encourage use of existing state resources for that purpose.

Despite problems, Waters said the state’s experience so far shows that minority- and women-owned business firms tend to hire more minorities.

“To the degree that minority contractors have a piece of the pie, then employment goes up because minority contractors hire more minorities,” she said.

Last summer, Waters sought minority contracting goals of 40%--20% for minority-owned businesses and 20% for women-owned firms.

Little of the criticism that has marked the debate over minority contracting goals in the past surfaced during the Senate debate, largely because lawmakers did not want to upset the delicately worked out agreement on the bond package.

“None of the bonds are going to move without this language,” said Sen. William Campbell, a Republican from Hacienda Heights who made a motion to delay the vote until Thursday, then withdrew it after getting word from a top Deukmejian Administration official that the governor wanted a vote on the bill Monday.

Because tensions still run strong, the affirmative action issue was put in a bill that can be enacted with only a majority vote in both houses. The individual bond measures, which are scheduled for a vote next week, require approval by two-thirds of the members in each house. Earlier, Waters threatened to amend each bond bill with the minority provisions, which would have meant certain defeat because of the difficulty in getting a two-thirds vote.

Waters and other supporters of the legislation, drafted quickly over the last few days, were not able to provide estimates of the kind of economic impact they expect if the bill becomes law.

They also conceded that follow-up legislation may be necessary to clear up several problems, such as a better legal definition of what constitutes a minority-owned business, what constitutes a “good faith” effort in deciding whether contractors make an honest effort to find minority subcontractors, and who will police the program.

Passage of the affirmative action bill in the Senate does not automatically clear the way for approval of the bigger bond package.

As it stands, the bonds are expected to be taken up in the Senate and Assembly Thursday.

But a new dispute is brewing over $1.53 fees that school districts charge builders on each square foot of new home construction. Developer groups have won Republican support to use an $800-million bond measure to build public schools as leverage to force the Legislature to water down the 1986 law that imposed the developer fees.

“We are not going to let the bonds off the floor until those problems are corrected,” said Assemblyman William P. Baker (R-Danville), vice chairman of the Assembly Ways and Means Committee.