Too Many Holes in Minority Rules, Protestors Contend
Proposed regulations designed to give minorities and women a larger share of state business are a “veritable chunk of Swiss cheese,” said an official of one of several minority and business organizations that are protesting the newly drafted rules.
The regulations are meant to implement AB 1933, the Minority and Women Business Participation Act, which went into effect Jan. 1. But they are so full of holes they “will render the basic law useless,” said Ruben Jauregui, treasurer of Associated Professionals & Contractors of California, a consortium of minority and women business groups.
“It not only creates the possibility of abuse, it practically invites it,” Jauregui said at a Los Angeles news conference Tuesday that was attended by representatives of several minority and women’s business organizations. A separate news conference was held in Sacramento.
The Minority and Women Business Participation Act, which went into effect Jan. 1, promises 15% of the dollar value of state contracts to minorities and 5% to businesses owned by women. According to one estimate, the state spends at least $5 billion a year on such contracts.
The representatives of minority and women business groups said Tuesday that they fear misuse of the system by so-called front companies that claim to be owned or operated by minorities or women but really aren’t.
The state General Services Department has been drafting regulations for several months to implement the act. Those regulations are scheduled to be delivered to the Office of Administrative Law on Sept. 1, Jauregui said.
The minority and women business groups want Gov. George Deukmejian to order an overhaul of the regulations before they are delivered to the Office of Administrative Law, said Jauregui, director of management consulting for the Santa Ana-based accounting firm of Miranda, Strabala & Associates. After that, changing the rules will become much more difficult even with the mandated public hearings, he said.
“Minority- and women-owned firms can provide quality goods and services on a competitive basis if given an opportunity to compete,” said Skip Cooper, a director of the Black Business Assn. and a business consultant. “Historically, a lot of those doors have been closed to us.”
At least 500,000 companies owned by women and minorities will benefit from the law, said Tony K. Wong, president of KaWES & Associates, an engineering firm. Only about 2% to 3% of state business currently goes to such firms, although some departments, particularly the state’s departments of transportation and corrections, do much better, said Wong, a representative of the Asian Business Assn.
Anne Garbeth, a spokeswoman for the General Services Department, said she couldn’t comment specifically on the groups’ objections.
“We’ve been working really hard to put together a package of regulations that would help us comply” with the law, she said. “They will have an opportunity for input” during public hearings after the regulations are sent to the Office of Administrative Law, she said.
The rules will be sent soon, although not necessarily on Sept. 1, she said.
The minority and women business representatives said they are concerned that the regulations do not set up an adequate process to certify whether a company is owned by a woman or a minority, instead relying on self-certification.
In addition, they said, prime contractors must make only “token good-faith efforts” to find minority and women subcontractors, and there is no penalty for failing toe comply with the law.
The regulations are also vague in defining who is an American Indian or Alaskan Native, and they exclude some minorities recognized by other state agencies, they said.
