Utilities Increase Buying From Minorities : Contractors: Only AT&T; loses ground in state program to purchase goods and services from minorities and women. Critics call data inflated.

Despite the recession, nearly all of California’s major utilities eked out gains last year in their state-mandated programs for buying goods and services from minority and women contractors, although most continued to fall short of the 20% goal they must reach by 1993.

But the data generated by the state’s seven largest investor-owned utilities is, as in previous years, drawing criticism from legislative and industry watchdogs who contend that some of the companies’ figures may be inflated or inaccurate.

The telephone, gas and electric utilities spent $939.1 million with minority- or women-owned companies in 1990--or 18.2% of their $5.2 billion in total spending, according to reports filed recently with the Public Utilities Commission. That compares to 1989 purchases of $823.2 million, or 16.6% of total contracting that year.

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

The minority and women business spending programs force utilities to seek out new companies that can bid on contracts, but the work is still awarded based on price and the services offered. By 1993, 15% of total contracting dollars must go to minority-owned companies and another 5% to firms owned by Anglo women.

Successful minority bidders credit the programs with helping them get established.

“I’m quite happy with the utility companies,” said Ed Apodaca, owner of Apodaca Computer Products, a computer-supply company in Anaheim that, after only two years in business, may reach $2 million in sales this year. “Without them, a small company like mine would never have gotten off the ground.”

The utilities are allowed to exclude portions of their spending from their contracting totals if they are unable to find minority and women contractors to provide certain goods and services. But those exclusions have sparked criticism.

On a percentage basis, GTE California led the pack, with 37% of its total spending--not counting exclusions--directed to firms owned by women and minorities.

But if the excluded areas are added--an adjustment encouraged by Pacific Bell, which along with AT&T; takes no exclusions--GTE falls into the middle of the utilities. Of its total adjusted spending, 15.02% went to women and minority contractors. Similarly adjusted, spending with minorities and women by the other utilities ranged from 13.87% by Pacific Gas & Electric to 16.5% by San Diego Gas & Electric.

Disregarding exclusions, all but one of the utilities boosted their percentages in 1990; the actual dollar volume spent with women and minority contractors declined slightly at two companies.

AT&T; saw minority and women contracting fall to $29.1 million in 1990 from $32.9 million in 1989; its percentage of total contracts, unadjusted for exclusions, dipped to 15.7% from 19.3% the year before.

Although the company lost a little ground last year, “we still go all out to meet this thing,” AT&T; spokesman Jim Sullivan said.

GTE’s spending with women and minorities slipped to $120.1 million from $120.9 million, even though its percentage jumped to 37% from 27.5% in 1989. GTE’s overall contracting dropped by $107 million in 1990 as the company finished a massive modernization program.

Some contend that the utilities’ figures may not be as good as they appear.

“Our primary concern is we don’t trust the integrity of the data, and as a result, we think there’s going to be an intensification of effort to falsify the data” as utilities compete to look the best, said San Francisco lawyer Robert L. Gnaizda, who represents the Greenlining Coalition, a collection of civil rights and minority business groups that has pressed the issue before the PUC and the state Legislature.

Although a clearinghouse operated most of 1990 to weed out “fronts”--firms that may not really be run by the women or minorities who own the 51% needed to qualify for these programs--Gnaizda contends that it is slow moving and unwieldy.

Gnaizda said he doesn’t blame Cordoba Corp., which operates the clearinghouse. Instead, he is critical of the system’s design, which seeks to certify every firm’s minority- or woman-owned status. Gnaizda said he would rather see audits of big contracts, combined with random reviews of smaller contracts.

The Greenlining Coalition also objects to the way some of the money is being spent--especially by GTE.

For example, Native American males last year received $9.2 million in GTE contracts, compared to $7.6 million for Asian males and $5 million for black males--a distribution that is out of proportion to the size of those minority groups in the overall state population. Latino men received $22.2 million.

Minority women--GTE doesn’t break out minority women by ethnic group--got $11.2 million in GTE contracts, compared to $64.8 million for Anglo women. Gnaizda said the statistics for women-owned businesses are particularly troublesome because of the suspicion that some of the businesses were originally owned by men who simply transferred ownership to a female relative.

“I would say the minority data is misleading,” Gnaizda said. “The women-owned data is useless.”

According to Gnaizda, GTE’s claimed performance poses a dilemma: “If GTE is correct, then it certainly deserves national awards and national recognition. But if it is correct, then it means the goals should be reset” to the 30% to 50% range.

GTE California spokesman Larry Cox said 90% of the firm’s spending with women and minority businesses has been certified by the clearinghouse, “which seems to work very well.” As for the ethnic distribution of contracting dollars, he said, “you can never base business opportunities--the reality of the business world--on a percentage in the population of a particular ethnic group in the community.”

Assemblywoman Gwen Moore (D-Los Angeles), who three years ago helped persuade utility executives to consent to the 20% goal, agreed that “obviously, there are some questions” about the utilities’ efforts. But she commended the utilities for their progress, particularly in seeking out companies in new fields and attempting to form joint ventures with minority and women contractors.

The utilities have done a good job so far, but they may find that the last few percentage points to meet their 20% goal may be hard-won, said Hollis Smith, executive director of the Southern California Regional Purchasing Councils that works with large companies to reach minority businesses.

“The difficulty in this whole process is: How many little bitty companies can a big company use? How many printers? How many office supply companies? . . . How many janitorial supply companies can a big company use?,” Smith said. “Now you’re getting down to the big ticket areas” in capital-intensive industries such as manufacturing where minorities and women have had a tough time getting established.

MINORITY CONTRACTING AT CALIFORNIA UTILITIES

Spending by the state’s seven largest investor-owned utilities with minority and women contractors. Some utilities have excluded a portion of their overall spending from contracting totals because certain goods and services were not available from women- or minority-owned firms. The utilities have agreed to spend 20% of total contracting, not counting those excluded areas, with minorities and women by 1993.

1990 TOTAL 1990 MINORITY AND % OF TOTAL Company CONTRACTING WOMEN CONTRACTING CONTRACTS AT&T; $184.6 million $29.1 million 15.7% GTE California 324.6 million 120.1 million 37.0% Pacific Bell 2.2 billion 364.0 million 16.3% Pacific Gas & Electric 1.0 billion 166.0 million 15.9% San Diego Gas & Electric 147.4 million 31.7 million 21.5% Southern California Edison 937.6 million 167.4 million 17.9% Southern California Gas 361.3 million 60.8 million 16.8% TOTAL 5.2 billion 939.1 million 18.2%