SBA Chief Vows Support for 51% Minority Ownership Standard
Small Business Administration Administrator Aida Alvarez has weighed in on a contentious national debate, vowing to support the current 51% minority ownership standard for enterprises seeking to participate in disadvantaged-business programs.
The issue comes to a head in the private sector next month, when the National Minority Supplier Development Council is expected to vote on a policy to allow businesses with as low as 30% minority ownership to be certified as minority-owned. The council certifies such firms for major U.S. corporations.
The council’s policy aims to open the door for equity investors to pump capital into minority-owned firms and would allow corporations to count business with those firms toward minority contracting goals as long as the minority owner manages day-to-day operations. But the proposal has prompted criticism from minority business leaders across the country, as well as from members of the Congressional Hispanic Caucus and Congressional Black Caucus.
Opponents fear that, if the private sector change is adopted, it could lead to changes in laws governing federal contracting. Federal contracting programs, overseen by the SBA, require 51% minority ownership.
Alvarez met last week with critics of the change--including the U.S. Hispanic Chamber of Commerce, the chairwoman of the National Council of Negro Women Inc., and the Rev. Al Sharpton--and agreed to issue a statement clarifying her views on the 51% standard.
“The National Minority Supplier Development Council proposal . . . runs counter to federal law and long-standing federal policy,” her statement says. “By using a . . . lower ratio, the NMSDC proposal creates confusion, which may result in a reduction of contracting opportunities for minority-owned businesses.”
NMSDC officials did not return calls for comment. Alvarez also said she is “prepared to lead a national debate” on the need for equity investment in minority-owned businesses--the root issue the NMSDC policy attempts to address.
