Minority Firms Making Inroads With Utilities : Equal Opportunity: Seven investor-owned firms awarded more contracts to women and minorities last year. But they have a long way to go before meeting a 1993 goal.

California’s seven largest investor-owned utility companies still have a way to go to meet a state mandate to buy 20% of their supplies and services from minority and women contractors by 1993.

But legislative and industry watchdogs, although skeptical of some of the companies’ figures, are meanwhile praising their efforts to meet the goals.

Last year, of a total $4.958 billion in purchases, the companies spent $823.2 million--or 16.6%--with minority- and women-owned firms, according to reports filed recently with the California Public Utilities Commission.

By comparison, the total for women and minorities in 1988 was $574.6 million, or 11.4%. That was the first time utilities submitted minority purchasing reports to the commission, after state legislators had applied pressure on the firms to beef up their minority and women contractors.

“Basically, it looks like on the surface, they’ve all exceeded their (1989) goals,” said Assemblywoman Gwen Moore (D-Los Angeles), who played a key role two years ago in persuading the companies to agree to spending goals of 15% with minority-owned businesses and 5% with women contractors.

For the year, the utilities spent $370.3 million with women-owned firms, or 7.5% of total purchases, and $452.9 million, or 9.1%, with minority-owned firms.

The seven are: Pacific Gas & Electric, American Telephone & Telegraph, Southern California Gas, Pacific Bell, Southern California Edison, San Diego Gas & Electric and GTE California.

In giving her initial reactions to the reports, Moore called the achievements “laudable.” But she noted that it was important to be cautious about the numbers because they were calculated internally, often without verification of suppliers’ claims to be minority- or women-owned.

An independent clearinghouse, which the companies fund, went into operation Jan. 1 and will be used for verification in the future. The clearinghouse, operated by Cordoba Corp., will provide a computer database of bona fide minority- and women-owned firms.

“If there are front companies, we hope the clearinghouse will pick them up,” Moore said. Fronts are those companies that pose as minority or women-owned, but are in fact owned by white men. A minority-owned firm is one in which minority group members own at least 51% of the company.

Robert Gnaizda, chief counsel for a group of 16 minority organizations called the Greenlining Coalition, said in the past the utilities’ statistics have been inflated by their failure to weed out fronts.

For example: “It’s so easy to transfer a business from a husband to a wife,” he said. He called it a type of “reallocation of paper work.”

Indeed, those companies that have investigated their contractors’ claims have disqualified numerous vendors from their minority contracting programs. Last year, based on auditors’ conclusions, GTE decertified 44 vendors that claimed minority status. Pacific Bell decertified 88.

Betty Banks, purchasing and minority business manager for AT&T;, said her company’s figures were accurate and said she didn’t believe the clearinghouse’s review would find substantial differences.

“But if a minority business isn’t a minority business, we certainly want to know about that,” Banks said.

According to the reports, Latinos received $165.6 million--the most money given to an ethnic group. Utilities reported increased contracting last year with all ethnic groups.

The companies are allowed to exclude large portions of their spending in calculating their progress toward the 15% and 5% goals. These so-called excludables include contracts for equipment not available from any minority- or women-owned firm.

Gnaizda, however, said the exclusions are arbitrarily done and sometimes used as excuses to not find minorities.

The six companies that reported their excludables--Pacific Bell had none--said $1.09 billion in spending, about 18% of their total outlays, was not factored into their minority contracting percentages.

Excludables were highest at GTE, which subtracted $500.4 million of its $941 million in expenditures, or 53% of its spending, from the base on which it calculated its minority contracting achievements.

Gnaizda was critical of GTE, a company he says was “dead last” in its affirmative action efforts several years ago.

Although GTE has managed to become the leader of the pack on a percentage basis--giving $120.9 million, or 27.4%, of its total $440.6 million spending to minorities and women last year--Gnaizda said he was suspicious of the phone company’s numbers. GTE, he said, had fired an independent auditor that it had agreed to let review its contracting last year.

“That’s preposterous,” Gnaizda said of GTE’s momentum. “That’s like Maury Wills becoming the major league’s leader in home runs in one year.” (Wills was a speedster, not a power hitter.)

“If General Tel is correct, and I hope it is, then it means the goals are too low and can be set at 25% to 30%,” he said. Originally, the goal for women and minority contracting was to be between 25% and 30%, but instead was compromised, according to Gnaizda.

Cox said GTE was “proud” of its numbers. He said GTE agreed to let an “observer,” hand-picked by Gnaizda, sit in on its audits and that the individual simply failed to attend a final meeting.

“We’re a little disappointed in Mr. Gnaizda’s unwillingness to be objective and fair,” Cox continued.

Gnaizda said he was generally pleased with the other utilities’ figures because they show that if companies “modify their old boy networks” they can indeed find qualified minorities, instead of using quotas and preferences.

Before the mandate, the utility companies averaged two-tenths of one percent of their total spending with minority- and women-owned firms, the attorney said.

Meanwhile, Gnaizda praised Southern California Edison, Pacific Bell and Southern California Gas--which he called “the pioneer”--for their commitment to meet and exceed the 20% goal.

Similarly, Charles E. Shepherd, coordinator for PG&E;’s Equal Opportunity Purchasing Program, said he’d give PG&E; an “A” for its efforts.

“We set a goal,” he said. “We not only obtained it, but we exceeded the goal.”

Last year, PG&E;’s affirmative action spending rose to $161 million, or 15% of total spending, from $153 million, or 12.2%, in 1988. It conducted business with 2,240 women- and minority-owned firms, 30% more than in 1988.

As examples of the company’s commitment toward minorities, Shepherd said its primary life insurance firm is reinsuring about 20% of PG&E;’s life insurance volume with a minority-owned insurance company. And PG&E; has also agreed to donate $500,000 to the Business Consortium Fund, which provides capital for minority businesses.

MINORITY CONTRACTING BY CALIFORNIA UTILITIES

Spending, in millions of dollars, by the state’s seven largest investor-owned utilities

Company Non-Minority* White Female 1989 1988 1989 1988 AT&T; $136,997 $133,160 $10,605 $10,061 GTE California 310,690 349,523 70,060 38,688 Pacific Bell 1,660,302 1,572,905 126,172 84,211 Pacific Gas & Electric 910,892 1,099,862 80,201 68,590 San Diego Gas & Electric 128,411 111,000 12,837 5,759 Southern California Edison 686,053 737,175 48,173 37,176 Southern California Gas 293,396 311,710 22,324 18,842 INDUSTRY 4,126,741 4,466,293 370,372 263,327

Company Black Latino 1989 1988 1989 1988 AT&T; $1,502 $846 13,082 4,330 GTE California 12,476 10,525 20,974 21,858 Pacific Bell 53,853 27,298 48,800 38,528 Pacific Gas & Electric 13,033 15,428 24,556 30,944 San Diego Gas & Electric 3,823 997 8,525 6,014 Southern California Edison 17,633 11,544 42,296 30,316 Southern California Gas 10,149 9,593 7,402 4,814 INDUSTRY 112,469 76,233 165,635 136,804

Asian Other 1989 1988 1989 1988 AT&T; 2,911 406 4,825 1,889 GTE California 8,139 8,021 9,261 4,135 Pacific Bell 27,439 19,668 46,380** 6,292 Pacific Gas & Electric 23,970 15,526 19,321 7,744 San Diego Gas & Electric 2,009 693 516 155 Southern California Edison 14,003 10,270 6,526 2,428 Southern California Gas 3,311 2,464 6,134** 3,830 INDUSTRY 81,782 57,048 92,963 26,473

Total Women and Minorities 1989 1988 AT&T; 32,925 17,532 GTE California 120,910 83,600 Pacific Bell 302,644 175,982 Pacific Gas & Electric 161,081 152,607 San Diego Gas & Electric 27,710 13,618 Southern California Edison 128,631 91,734 Southern California Gas 49,321 39,543 INDUSTRY 823,222 574,616

Total Company % Women and Spending Minorities 1989 1988 1989 1988 AT&T; 169,921 151,151 19.4% 11.6% GTE California 431,600 432,751 27.4% 19.2% Pacific Bell 1,962,946 1,771,641 15.4% 9.9% Pacific Gas & Electric 1,071,973 1,252,469 15.0% 12.2% San Diego Gas & Electric 156,122 124,608 17.7% 10.9% Southern California Edison 814,684 828,909 15.8% 11.1% Southern California Gas 342,717 351,253 14.4% 11.3% INDUSTRY 4,949,963 5,026,178 16.6% 11.4% * Includes businesses owned by white men and publicly owned firms ** Includes subcontracting with all minorities Source: Company reports filed with the California Public Utilities Commission