L.A. Program May Emerge as Model for State

A state Supreme Court ruling that may obliterate hundreds of government outreach efforts to minorities and women appears to leave Los Angeles’ program unscathed and a likely model for others statewide.

City officials have required contractors for years to reach out to small businesses owned by members of minorities and women, even expanding the program since voters struck down race- and sex-based preferences four years ago with Proposition 209. The city did it with finely honed legal language. And on Friday that careful work paid off.

When the state’s high court rejected a San Jose program that required contractors to solicit--though not necessarily to accept--bids from minority and women subcontractors, it cast a death shadow on all programs that exclusively target minorities and women.

But in a dissenting opinion, Chief Justice Ronald M. George specifically pointed to Los Angeles’ program as legal under Proposition 209; the majority opinion also cited it as the kind of program that might withstand legal challenge.

Even the conservative Pacific Legal Foundation, which pursued the case against San Jose, concedes that the Los Angeles program would probably survive.

The difference: Los Angeles’ program calls for outreach to minorities, women and others. That might seem like mere semantics. But in a county where more than a third of all businesses in 1992 were minority-owned and more than a third were women-owned, it has translated into tangible opportunities.

While including “other” businesses, the city’s aggressive program has accomplished its pre-209 goal: to bring firms owned by women and members of minorities into the loop on contracts and procurement. The city program has already served as a model for others across the country, and--even before Thursday’s ruling--San Jose officials had scheduled a visit to Los Angeles.

Now it appears that Los Angeles’ effort may become a model for the post-209 era.

“We have worked very hard to make sure that small disadvantaged businesses have opportunities that other businesses have on a normal basis,” said Rocky Delgadillo, deputy mayor for economic development. “We are encouraged by the initial analysis [and] we are open to sharing our system with whoever is interested in looking at it.”

Since Proposition 209, many government entities have abandoned affirmative action programs altogether--including outreach--in fear they would find themselves the targets of costly legal challenges.

“We were instructed to drop the ball because of potential lawsuits,” said Frank Perez, who oversees contracting for Inglewood. The city now does little more than advertise opportunities in minority publications.

The county of Los Angeles, too, requires no outreach, instead encouraging its departments to consider disadvantaged contractors and publishing a directory of businesses owned by women and members of minorities.

In contrast, the city of Los Angeles has been much more aggressive. Legal foresight long before Proposition 209 paved the way for a program that has gotten stronger since. So did a commitment from Mayor Richard Riordan--who broke ranks with many Republicans to oppose 209--to the minority- and woman-owned firms that pervade the region.

The city’s effort to do business with minorities and women dates to a 1983 executive directive by Mayor Tom Bradley. Six years later, a U.S. Supreme Court ruling struck down mandatory set-asides for minority contractors if there was no clear evidence of past discrimination.

The city’s legal staff saw trouble ahead. It limited the policy to outreach and expanded it to give minorities, women “and all other business enterprises an equal opportunity to participate in the performance of all city contracts.”

The decision wasn’t popular but it proved visionary.

“The howls of protest were very loud from people who thought we were abandoning affirmative action--from minority groups, from Mayor Tom Bradley’s office--even law professors around the country were saying we were being way too conservative in our approach,” said City Attorney James K. Hahn.

“I think the results have borne out that strategy as the right one.”

The program was challenged anyway, but in 1994 the state Supreme Court upheld it in Domar Electric vs. city of Los Angeles. That case was the one mentioned by the justices in their Thursday ruling and could ultimately protect the city from future challenges.

That same year, the Northridge earthquake hit, and the program received an unlikely boost. The Department of Commerce awarded a $1-million grant to an outreach program that the city had just established, on the condition that $400 million in contracts be directed to minority entrepreneurs.

The Minority Business Opportunity Committee exceeded expectations, and then-Commerce Secretary Ron Brown flew to Los Angeles to declare the program a national model.

To date, the program has helped channel $1.1 billion--or 13.5% of all city contracts--to minority-owned businesses. The numbers dropped sharply after Proposition 209, but they have climbed to near-record highs this year, city data show. About $88 million in contracts--or 10% of the total--has gone to women entrepreneurs this year, up from 4.5% last year. Those numbers had not been previously tracked.

Diane Castano Sallee, who heads the program, and her staff maintain a database of minority- and women-owned firms, notifying them--and any other business that asks--when contracts become available. The program also encourages prime contractors to carve up jobs for smaller businesses, and introduces them to potential bidders.

Martha Diaz Askenazy, whose San Fernando-based Pueblo Contracting Services reinstalled the Angels Flight funicular railway downtown, has sat on both sides of the table, as a subcontractor and as a prime.

Outreach “is very, very important,” she said. “It’s a minimal effort to identify women- and minority-owned contractors to look at your bid and give you a quote. You may not be the selected bidder, but at least you made entree and made a connection.”

The program has also linked more than 250 private contractors--including big players such as Bechtel, Walt Disney and Parsons--with women- and minority-owned firms. And last year, the city launched a program to encourage purchasing giants such as Xerox to share their contracts with smaller entities, minorities and women included.

Sallee has hosted visitors to the program from Texas, Tennessee and Louisiana. She has fielded inquiries from the cities of San Francisco, San Diego and San Jose. San Jose officials from that city are planning a visit next month, Sallee said.

San Jose City Atty. Richard Doyle said Thursday that the Los Angeles program “is something we are definitely going to look at.”