A Door Slams : Minorities, Women Say Affirmative Action Is Gone

The fax machine at Lisa Campbell’s asbestos-removal company in Pomona used to buzz to life 30 times a week with requests from big construction companies seeking to use her on state-funded projects. Now, she says, she gets only two to five faxes weekly.

Charles Blackmore, an African American who owns a computer hardware services company in Orange, says government workers abruptly end phone calls after he identifies himself as a minority business owner seeking to bid on projects.

And Mary Ann Mitchell, president of a Culver City computer consulting company, says one contractor she had worked with for nine years excluded her from a project recently, blaming cost cutting. But Mitchell believes the real reason is that hers is a minority-owned business.

“I’ve stopped putting MWBE on anything I send out,” she said, referring to the Minority, Women Business Enterprise designation used by companies to signify that they qualify for affirmative action programs. “People tend to throw it in the trash if they see it.”

Women- and minority-owned businesses that work on state contracts say the door of opportunity has slammed shut on them. The business atmosphere in California has changed dramatically since Gov. Pete Wilson issued an executive order in June and followed up with an anti-affirmative action lawsuit in August, they say.

Although Wilson’s legal battle to end state affirmative action programs is still in the courts and construction industry representatives say nothing has changed, many small, women- and minority-owned businesses fear for their survival. More than 6,000 are certified to work on state construction contracts.

“There’s no way to count how many have gone out of business, and some are teetering so much I don’t know why they’re not out of business,” said Paul Guerrero, president of United Minority Entrepreneurs, a statewide business organization.

Many of these businesses say Wilson’s June 1 executive order dealt them the first in a series of blows. Calling affirmative action “preferential treatment,” the governor ordered all state agencies to immediately disband their affirmative action advisory committees.

The volunteer committees oversaw how well the state was meeting its goals to award 15% of the money spent on state contracts to minority-owned businesses and 5% to women-owned businesses.

The order also abruptly terminated business advisory councils in the Department of General Services, Caltrans and the Department of Corrections that were made up of representatives from minority and women’s business groups.

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In monthly meetings, the unpaid representatives oversaw contracts, got quarterly data on progress toward affirmative action goals, advised bureaucrats on how to find women- and minority-owned businesses and spread the word to their own members about upcoming projects, said Fred Jordan, president of F.E. Jordan Associates Inc., a San Francisco engineering and planning firm and a former member of two advisory councils.

On Aug. 10, Wilson followed up his order with a lawsuit asking the state appellate court to strike down statutes that set up affirmative action programs. In a separate action Oct. 1, the California Department of Transportation, following Wilson’s orders, lowered its 20% female and minority participation goal to 10%, to correspond to the federal goal.

Although legal and political battles still continue against the governor’s actions, “the perception is that affirmative action is gone,” said Valora Harvey, president of the California Assn. of Affirmative Action Officers. “It’s almost as if there is no affirmative action at all.”

The result has been devastating, contractors say.

Previously, minority and female subcontractors were contacted by general or prime contractors who submitted bids for million-dollar projects, using the subcontractors to do pieces of the work.

But now, individual female and minority contractors, as well as their member associations, report that calls from general contractors have drastically decreased. Some minority and female contractors report that estimators, who work for large construction firms and provide information on bids, aren’t even returning calls.

“It was the first time any estimator would not pick up the phone,” said Lori Lovett, a general engineering contractor in Wrightwood, Calif. “It really has changed over the past few months.”

Even disabled veterans, specifically excluded from the affirmative action cutbacks, are hurting, said Jim Ramos, coordinator of the Disabled Veterans Business Network.

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“Since about last May, our solicitations are down 70%,” Ramos said.

Some prime contractors have admitted outright that they are scaling back on affirmative action, said Pomona business owner Campbell.

Frustrated by the sudden decrease in faxes sent to her, Campbell said she called a few of the prime contractors to ask why. One contractor admitted that her work was good, Campbell said, but he added jokingly: “Lisa, it’s back to the good ol’ boys club. Haven’t you heard, affirmative action is out?”

“ ‘Without affirmative action, we don’t have to use you,’ ” Campbell said she was told by another.

Women- and minority-owned companies are also increasingly being ignored by large companies via a process known as “bundling,” said Mitchell, who heads the 1,500-member Black Business Assn. of Los Angeles.

When the state issues a contract for $5 million or more, only large corporations can bid, she said. Previously, the business advisory councils were able to recommend that projects be broken down into contracts smaller than $1 million, enabling the smaller women- and minority-owned companies to directly bid, Mitchell and Jordan said.

That has ended with the councils’ dissolution, Jordan said.

Minority business owners say state workers are confused about what information they can still give about affirmative action. Many state workers believe that under the governor’s executive order, they are prohibited from providing help to minority businesses. So they abruptly say that affirmative action programs have ended and provide no further information when business owners like himself call to bid on state contracts, Blackmore said.

“There’s a lot of misunderstanding about the executive order,” Harvey agreed. “But no direction has been given to any agencies at all.”

Since Wilson’s order, contractors have been watching Caltrans contract awards closely, trying to gauge the direction of the state. A recent contested award involving a bridge construction project in the Coachella Valley has given affirmative action supporters cause for more hand wringing.

Caltrans awarded a $13-million contract to low bidder Granite Construction Co. of Watsonville, Calif., despite protests by runner-up E.L. Yeager Construction Co. of Riverside, whose bid came in at $15 million. Yeager protested that Granite had only 3.5% female and minority participation, far short of the 20% state goal, which Yeager claimed it and four other bidders met.

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Cliff Dawley, a Yeager estimator, said his company previously had lost out on contracts in which they had minority and female participation as high as 18%. The award to Granite signals that the state has backed off from its push to get contractors to meet the affirmative action goals, Dawley said. It could mean that firms that take the time and money to seek out minority and women-owned firms are at a disadvantage in bidding, he said.

“It sets a new standard on how things are to be done in the future,” he added.

But Caltrans officials and construction industry representatives say the situation is not as dire as that painted by minority- and women-owned businesses.

Dwaine Shields, a Caltrans attorney, said the state standard has not changed and the Granite award does not indicate new rules are in place.

The state does not examine a contract according to the contractor’s ability to meet the affirmative action goals, he explained, but according to efforts at good-faith outreach, a 10-step procedure. Granite met all the good-faith requirements, Shields said.

Conversely, contractors who meet or exceed the goals without following the good-faith effort could still have their bids rejected, he said.

“We haven’t noticed any significant change in how our people do business,” said Jim Burton, executive vice president for the Southern California Contractors Assn. “The good-faith effort is still there.”

Tom Holsman, executive vice president of the 1,200-member Associated General Contractors of California, said all contractors are hurting now, not just minorities and women. Money spent on highway, bridge and other large construction projects is expected to decline 1.7% in 1995, according to the Construction Industry Research Board, and 18.8% in 1996.

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With fewer Caltrans dollars for public construction projects, general contractors have been going out of business or merging, Holsman said.

Minority- and women-owned subcontracting companies may simply be feeling the general industry decline, coupled with the typical winter slowdown in construction work, he said.

“At this point in time, it’s really too soon to say there’s been any precipitous change in the way contractors do business,” he said.

Still, Jordan estimates that minority and female participation in state government construction projects has already fallen by half. But because the councils no longer exist to get the data, no figures are available.

David Keen, managing director of BBC Research & Consulting, a Denver firm that does studies for government agencies, said city and state agencies that end their affirmative action programs because of legal challenges find that participation by minority and female contractors declines over time. After Minneapolis eliminated its affirmative action program, for example, awards to minority contractors fell from 11.2% of contract dollars in 1989 to 2% in 1992.

But minority and female business owners in California say they haven’t had to wait long to feel the pinch.

Campbell, whose firm has 100 employees and a gross income of $2 million, said she got her start seven years ago thanks to affirmative action programs at Southern California Edison and the Gas Co. Now she is seeking a license to do demolition jobs to make sure she stays in business.

Even in a bad economy, Mitchell watched her 6-year-old company grow by 50% every year. Now she is worried that those years are over.

“I do see things going backwards instead of forward,” she said. “But I’m more concerned with the people I’m able to employ. My employees are from the inner city, and they would be unemployed if I could not continue.”