Minority Firms Want to Help Rebuild Kuwait : Opportunity: Owners of small U.S. companies want a piece of the $100-billion pie. But their size and lack of experience in the Mideast may work against them.

As Harold Martinez sees it, when America’s minorities were asked to put their lives on the line to liberate a tiny country halfway around the world, they did more than their share.

So it is only fair, Martinez figures, that minorities should also get a share in the rebuilding of Kuwait--an undertaking that represents one of the biggest business opportunities ever.

As the owner of a small Los Angeles fabricating firm and as president of the city’s 700-member Latin Business Assn., Martinez recently delivered that message in meetings with White House officials and congressional leaders.

However, he wasn’t happy with the response he got.

“Everywhere I went they told me everybody wants to go to Kuwait,” Martinez said. “I would have liked to have heard President Bush or someone say to the Kuwaiti government: ‘When you hand out those contracts, don’t forget that our minorities fought to make you free.’ ”

By some estimates, Kuwait may spend up to $100 billion, and it has promised that the lion’s share of the work will go to the countries that helped most with the war effort. Battered by a declining U.S. economy and bolstered by a fresh surge of postwar patriotism, minority businesses are leaning on elected officials to press their case for a share.

But there may be a serious mismatch between the types of work needed in Kuwait and the products and services being offered by many of the firms that are lining up. Kuwait needs cars and trucks and heavy machinery; it needs its highways, airports and sewer systems rebuilt; it needs its burning oil wells capped and its refineries and oil pipelines restored. The scope of such jobs may rule out many small companies.

“I’m a businessman and I understand the contracts are complex and I understand that the big companies have more experience,” Martinez said. “But the fact remains (that) the politicians know (minorities) were among the ones fighting on behalf of the Kuwaitis. We should be first in line to receive some of the contracts.”

Commerce Department officials say they expect U.S. firms to receive between 50% and 70% of the estimated $100 billion to be spent on restoration contracts from Kuwait. But, they point out, minority businesses may not collect much of it because Kuwait is not legally obligated to employ any particular market segment or business in its reconstruction.

Those minority executives accustomed to U.S. government set-aside programs, which ensure that a predetermined amount of government work is allotted to small or minority firms, may be disappointed if they expect the Kuwaiti government to do business in a similar fashion, said John Winston, national assistant director of the U.S. Minority Business Development Agency, the unit within the Commerce Department charged with aiding minority business enterprises.

“You can’t set aside someone else’s money,” Winston said. “Please accept the fact that the little guy with a hammer and a saw who does internal home repairs isn’t going to find any business in Kuwait.”

The call by these small vendors for an increased role in the rebuilding of Kuwait is an ironic turn from the prewar stance of some minority leaders who opposed the conflict, contending that disproportionately large numbers of non-whites were among the fighting troops.

Rep. Donald Payne (D-N.J.) voted against authorizing President Bush to use military force to remove Iraqi forces from Kuwait, but insisted: “I don’t see where that has anything to do with the rebuilding effort. Now that the war is over, I think it is only fair that minorities be among those receiving contracts to rebuild Kuwait. (Minorities) still were 30% of the ground forces in the Gulf, an amount larger than all of the Western allied troops and larger than all of the Arab troops.”

During a daylong public hearing of the U.S. Commission on Minority Business Development here on March 28, a parade of government officials, entrepreneurs, interest groups and organizations expressed concern that minority businesses were being excluded from contracting opportunities in Kuwait and the Middle East.

Joshua Smith, chairman of the commission and president of Maxima Corp., a Maryland-based information and professional services firm, criticized the U.S. Army Corps of Engineers, which is coordinating the first phase of emergency restoration work for the Kuwaiti government.

To date, no small or minority-owned firms have received contracts or letters of intent to do restoration work in Kuwait. The $45 million worth of contracts awarded so far have gone to nine large, international firms, including four from the United States.

A corps spokesman said none of the contracts signed in that round of emergency work were set aside for minority vendors, partly because it was necessary to hire firms with Middle East experience and partly because the Kuwaiti government insisted that those firms get to the country within 10 days after the war’s end.

“Doing set-asides is very difficult when you have that kind of criteria,” the spokesman said. “The concern was to get the services resumed as quickly as possible.”

But Smith, who is black, said the corps’ excuse is “an automatic cop-out. It means they just haven’t done their homework to find qualified minority vendors in advance of having to send someone over there in a hurry. If they had done this beforehand, they wouldn’t have gotten into such a predicament in the second place. There’s no excuse.”

Stung by such criticism, the corps is preparing a set-aside program that will include minorities and small business in engineering services for future jobs in the Middle East, a spokesman said.

Many of those testifying at the hearing admitted that minorities have a tremendous handicap because they typically have no prior relationship with Kuwaiti officials. Worse, some said, they often fail to understand--or appreciate--the subtleties of making deals with Arabs.

C. Elliott Van Stuyvesant is executive vice president-international of Strategic Technology & Aerospace Industries, a Texas-based minority-owned conglomerate of high-tech concerns. He said he is “on the verge” of striking a deal with the Kuwaitis to provide computers with Arabic characters. The hardest part for his company and other minority firms with limited Middle Eastern experience has been finding qualified and reliable agents to present his company to Kuwaiti officials, Van Stuyvesant said.

“You cannot do business in Kuwait unless you have a citizen of Kuwait who will act as an agent,” he said, adding that these contacts often demand tens of thousands of dollars in fees just to introduce a business to government officials. “Many black and minority businesses have never heard of such a thing and can’t afford to spend money that way. Often, they refuse to go along and never get a chance to sell themselves or their products.”

Meanwhile, some minority entrepreneurs are trying hard to secure that Kuwaiti deal that, as one business executive predicted, “could keep us going for the rest of my lifetime.”

Harriet Michel, president of the National Minority Suppliers Development Council, a New York-based umbrella organization that maintains a database of more than 15,000 minority-owned firms, said she doubts minority-owned firms will land many of the prime contracts. However, her organization and other minority-business advocates believe that the federal government should do all it can to insure that minorities are not completely left out when the dollars start flowing out of the Middle East.

“It’s a leadership issue,” she said, adding that the Bush Administration should urge domestic firms to include minority subcontractors in their proposals for work in Kuwait. “They could encourage American corporations by saying this is the right thing to do.”

At least one firm that is expected to garner some large contracts in Kuwait, San Francisco-based Bechtel Group Inc., has already obtained a list of contractors from the council.

Some minority business executives, such as Van Styvesant, are seeking business in Kuwait without arguing for it on moral grounds. Rather, he said, his company is trying to work its deal directly as a prime supplier employing Middle Eastern contacts.

“I understand that there are no set-asides,” Van Styvesant said. “I realize that it’s big business, open to international competition. We’re just going out and fight for a shot.”

REBUILDING KUWAIT Awards by the U.S. Army Corps of Engineers for the restoration of infrastructure in Kuwait

Date Description Contractor Amount Jan. 31 Acquisition of airport Raytheon $5.7 million equipment Burlington, Mass. March 3 Emergency electrical Blount International $3 million repairs Montgomery, Ala. March 3 Temporary repairs to Blount International $3 million public buildings Montgomery, Ala. March 3 Expedient survey of American Dredging $400,000 Shu’Aibh Port Camden, NJ March 3 Repair of roads and Al Harbi Trading & $4.5 million airport runways Contracting Riyadh, Saudi Arabia March 3 Temporary repairs to Brown & Root $3 million public buildings International Houston March 3 Temporary repairs to Mohamed A. Kharafi $5 million public buildings Abu Dhabi, UAE March 3 Repairs to sanitation and Shand Construction $2.6 million water systems Derbyshire, England March 3 Expedient repairs to Khudair Group $1 million Amir’s offices Al Khodar, Saudi Arabia

Source: U.S. Army Corps of Engineers