Harsh Appraisal of L.A. Program : Fuzzy Goals, Favoritism Mark Minority Contracts

As a black Los Angeles businesswoman who owned a small, family clothing store, Erma Nelson, 48, thought she was an ideal candidate for a new program designed to “substantially increase” the percentage of city contracts awarded to minority and female entrepreneurs.

So three years ago, excited by her success with an Olympics gift stand, Nelson filled out the necessary paper work to qualify for the Minority and Women-Owned Business Enterprise Program and began contacting major concessionaires at Los Angeles International Airport.

Nelson, who hoped to get a shop in a busy terminal, made repeated calls to airport contractors--all to no avail. None, she said, was returned, and eventually she was forced to put aside her quest.

Last month, Nelson was not surprised by reports that the wife of a prominent black congressman and several others with strong political connections to City Hall had succeeded in landing airport concession contracts where she had failed.

“It’s who you know,” Nelson said. “This is nothing but a racket.”

Nelson is not alone in her harsh appraisal. Six years after the program was first announced by Mayor Tom Bradley, it is under attack from minority and female professionals, City Council members and even some officials in the mayor’s office.

The critics say the program has been overwrought with bureaucracy while falling short of its promise to direct millions of dollars in city contracts to minorities and women. Instead, critics complain, contracts have gone to a favored, select group of politically connected entrepreneurs.

“Somewhere (beyond) the noble goals there are serious questions about implementation that have not been adequately addressed,” said Councilman Michael Woo. “How do we know we aren’t just providing benefits to a few individuals?”

City officials, conceding the program is in trouble, are trying to re-evaluate the effort and spell out--surprisingly, for the first time--just how it should work, who should benefit and what office should take charge.

Audit Began Last year

The principal vehicle for this reassessment is an audit of the program started quietly last year by the city’s chief administrative officer. The review was initiated by council members who had received complaints that minority contracts were going only to a favored few.

The audit was accelerated sharply last month, officials have told The Times, in the wake of revelations about airport concession contracts awarded through the program.

The Department of Airports approved lucrative gift and food concessions contracts for a group of politically well-connected minorities and women, many of whom have had little involvement in running the concessions.

The contracts were given to such influential minority partners as Betty Dixon, the wife of Rep. Julian Dixon (D-Los Angeles); Los Angeles Urban League President John Mack and Bishop H. H. Brookins, a longtime community religious leader and Bradley supporter who helped launch the mayor’s start in politics nearly three decades ago. All have defended their contracts as legitimate.

In a sweeping political gesture, Bradley in 1983 ordered all city departments to become “fully committed” to developing programs to “substantially increase” the share of city contracts going to minority- and women-owned businesses.

‘Disadvantaged’ Companies

The plan called for city departments, which contract for everything from flipping burgers to building sewers, to give a greater share of their business to minority and women firms and encourage majority, Anglo-owned contractors to share a slice of business with these “disadvantaged” companies.

What Bradley’s executive order boasted in theory, it lacked in nuts-and-bolts guidelines. The city program allows each of the more than two dozen departments to implement its own plan. The departments set different goals for minority participation, different qualifying standards for firms and different procedures for monitoring the programs.

Furthermore, the mayor’s office, which oversees the program, does not collect complete information from all the various departments, nor does it have a systematic way of reviewing what information it has.

As a result, no one at City Hall can say exactly how many minority-business contracts there are, what they are worth and who holds them. The mayor’s office estimated that for the five years ending in June, 1987, about 8% of $3.8 billion in city contracts went to minority and women firms. But Wilfred Marshall, who oversees the mayor’s minority business program, cautioned that the numbers “may not be good” because of reporting problems and lack of auditing.

Compounding the confusion are federal programs that, unlike the city program, require minority and women partners to serve a direct management role in operations so they can one day compete for government contracts on their own. In cases like the airport, maintained with both federal and city funds, there is confusion whether the stricter federal or less stringent city rules should apply.

Help for Whom?

Additionally, the program never specified what type of minority- and women-owned firms it was supposed to help. Some city officials say struggling small businesses that need a boost should be the prime target. Others say large, well-established firms--or even wealthy individuals--should be allowed to participate in minority contracts, so long as they qualify as minority firms.

“That’s (a) basic philosophical dilemma,” said J. P. Ellman, a City Council legislative analyst who is reviewing the program. “And we don’t know what the answer is.”

The sweeping review by the city’s administrative officer, expected to be completed by the fall, will provide the first detailed examination of a program that critics contend is vulnerable to abuse because of fuzzy goals, inconsistent guidelines and poor monitoring. The audit will address the lack of reliable citywide data to monitor the program’s progress and examine the hodgepodge of regulations that vary from department to department, said Stephen Wong, the assistant administrative officer overseeing the audit.

In addition, the audit will attempt to determine whether a small number of minority firms are getting the bulk of the business.

Nelson, the businesswoman passed over by major concessionaires at the airport, said she thinks the city’s program does little for small business owners. Nelson suffered a setback last year when she closed her South Los Angeles clothing store.

No Record of Calls

A spokesman for the main airport concessionaire, Duty Free Shoppers Group Ltd. Partnership, responded by saying the company had no record of Nelson’s calls. But he added that Nelson may have called after the firm had selected its minority partners.

Nelson, a Teletype supervisor for the Los Angeles County Sheriff’s Department, said that the prominent minority leaders who received the concession contracts needed assistance “like I need a hole in the head.”

Criticism of the program is not new.

Concerns were raised in connection with the minority business program during a running City Hall debate last year when several close allies of Bradley--including airport concessionaires Brookins and attorney Andy M. Camacho--were added to a team of developers seeking the contract for a hotly contested, $200-million expansion of the Civic Center.

The contract was controversial because, at the time the City Council selected the Brookins-Camacho team, the proposal as presented would have cost the city $3 million a year more than another bid preferred by city staff members.

Bradley said neither he nor his office was involved in the selection.

Several months later, in November, nearly 100 black, Latino and female professionals came forward at an extraordinary City Hall public hearing on the city’s program. At the meeting--called in response to mounting criticism about the program--speaker after speaker vented frustration. Many of the minorities and women who attended the hearing shared their own personal experiences about how city departments had resisted their efforts to compete for contracts.

Five-Year Wait

Donald A. Harvey, a black Beverly Hills businessman, said that Harbor Department officials told him last year they would have no business opportunities for minorities for the next five years.

“A lot of people here are complaining about this issue of opening the doors and participating,” Harvey said. “It just cannot be done.”

(Harbor official Lonnie Tang subsequently said the remark was made “in a general sense” to minority entrepreneurs regarding commercial and retail opportunities for any business in the port area. He said the Harbor encourages minority participation, but that contracts in retail and commercial areas are tied up in long-term commitments).

Charles E. Dickerson, president of the John M. Langston Bar Assn., also testified at the hearing, complaining that few black lawyers in Los Angeles have been successful in their attempts to get bond counsel or legal work from the Community Redevelopment Agency.

“To a certain extent, the old boy network continues,” Dickerson said in an interview last week. “Those (minority and women lawyers) who are getting the work were allowed in as essentially tokens so that . . . at least the appearance of meeting the goals (of the program) could occur.”

After listening to the complaints at the hearing, Councilman Zev Yaroslavsky called for the city to revamp the mayor’s program.

‘Pet Peeve’

Yaroslavsky, a frequent Bradley critic, said the minority business program has “been used to advance the interests of specific individuals occasionally and not to advance the causes of minority-owned businesses. This has been one of my pet peeves about the program. It’s not what you know, but who you know that gets you in.”

Bradley acknowledges some concerns about the program. Earlier this month, before revelations about Dixon and her partners obtaining the airport contract became public, the mayor issued a letter endorsing the chief administrative officer’s audit and calling for reforms that will “guard against sham businesses that act only as fronts.”

“The city must take every necessary step to guarantee that city contracts are available to all interested businesses, not just those few who have learned the ropes around City Hall,” Bradley wrote.

Mayoral aides, though, say the weaknesses in the program are not entirely their fault.

Marshall, the Bradley aide who oversees the program, said that in most cases prime contractors--not the mayor’s office--choose minority subcontractors on city jobs. He also said that many minority businesses do not utilize his office to understand the city contracting system or develop contacts with prime contractors.

Asked about complaints that the program is weighted in favor of firms who already have been successful in obtaining city business, he responded:

“Don’t blame me. This whole world operates on relationships. This is not about fairness. Business is not about fairness. Business is about taking advantage of what is there to take advantage of.”

Staff writer Elizabeth J. Mann contributed to this article.