Recommendations to the 111th Congress and the Presidential Transition Team

Background –


There have been many challenges set before minority owned businesses who seek to do business with the federal government.  The first of recent challenges began in the mid-1990’s with the “Reinventing Government” campaign that shifted much procurement activity to bundled packages.  This brought in an atmosphere where small, especially minority businesses, could no longer compete for prime contracts and were excluded from subcontracting.


There were some federal agencies such as Defense and Treasury that no longer put emphasis on Small Disadvantaged Businesses (SDB’s) and 8a firms.  Treasury Secretary Rubin told me to my face that he did not approve of affirmative action.  Secretary Summers, his successor, felt the same and attempted a race neutral concept known as BusinessLinc.  It was a disaster as all race neutral programs are.


Transportation Secretary Slater gutted the civil rights staffing for the Federal Highway Administration beginning in the late 1990’s.  He changed rigid goals for waivers and the state recipients of highway funds were able to downgrade any minority business programs such as the Disadvantaged Business Enterprise (DBE) program.  Fraud with the DBE program became rampant with the Federal Aviation Authority via store ownership at airports.  The Federal Highway Administration even canceled Executive Order 11246 (attached) which was the start of affirmative action initiated by President John F. Kennedy.  How this was legally done is still beyond me.  One thing is certain:  Black business participation and the hiring of Black workers within the authority of the Federal Highway Administration have been all but eliminated.


8a volume with the federal government started dropping at the rate of $1 billion per year beginning with FY1996.  If you pull Alaska Native Corporations from those numbers you will find that the decline has not stopped.


The Office of Small Disadvantaged Business Utilization (OSDBU) has become for the most part a “joke” in terms of effectiveness and authority (with the exception of HUD).  There was such a lack of oversight that the widely publicized “Mentor/Protégé Program” became a criminal operation.  The DOD OSDBU who was in charge of this program is now serving a 24 year prison term in maximum security for soliciting major bribes.


The Office of Management and Budget has become no friend of minority business.  Every time there is an “emergency” such as 9/11, Iraq War, Katrina, Bailout, etc. the first thing OMB does is declare a waiver from the Federal Acquisition Regulations (FAR) and eliminates affirmative action.  There is lip service but no true effort at diversity.


When the National Black Chamber of Commerce, Inc. was formed the SBA had an annual budget of about $900 million.  Today, that budget is about $470 million.  It has been emaciated and there is no viable operation out in the field.  We embedded our activity in the Gulf Coast Rebuilding for the last three years.  We have yet to see an employee of the SBA in the state of Louisiana.  There is some SBA activity in Mississippi but there has been none in Louisiana.  We have had three annual conventions and many workshops in New Orleans and have offered the SBA district office free access to these events (the district office is within walking distance of these events) and never has an SBA employee attended.  There has been generated a lot of contracts that we are proud of but no credit can be given to the SBA.  Such is the case around the nation.  In effect, we have no SBA.  The SBA is becoming such a nonentity that they have even stopped certifying businesses for SDB status.  This is devastating.


A Model to Emulate –


There has been one “shining star” amongst this mass of neglect and discrimination.  The US Department of HUD under Secretary Alphonso Jackson has shown that success in diversity is quite possible with just a true commitment.  In just one administration, this large federal agency became the leader in contractual performance with small, minority business (SDB and 8a).  How did he do it?


The first thing was to remove the career employee at the OSDBU office and replace him with a political hire.  One whose commitment to the mission and loyalty to management was apparent.  He then empowered this new OSDBU with direct access to the Secretary himself.  All (ALL!) contracts had to be reviewed by the OSDBU for compliance.  The OSDBU had veto power on any contract that did not meet the commitment level of the Secretary.  Only the Secretary himself could override the OSDBU veto.  It did not take the procurement department long to realize that a commitment to diversity was a requirement for all working at HUD.  HUD began to scrub the 8a portfolio and communicate with these businesses.


It was beautiful to see on the HUD website procurement opportunities that were populated with SDB set asides and 8a set asides particularly in the Request for Proposal (RFP) category.  This was perfectly legal with professional service contracts.  NBCC members were totally invigorated in this new pool of opportunity and actively participated.


In addition, HUD orchestrated many procurement fairs and workshops around the nation in its outreach to minority business.  The results were amazing.  HUD now leads the federal government in small business participation, SDB business participation and 8a business participation.  All it takes is an organized commitment and courage from the top.


Recommendations for Change –


  1. Use the HUD Model (per Secretary Alphonso Jackson) as a model for all federal agencies.  The OSDBU’s should be political hires with business experience and a proven commitment to diversity.  Each OSDBU should answer directly to the Deputy Secretary or the Secretary and must have veto power over procurements that lack diversity.  Diversity in contracting must be highlighted in the performance reviews of each Deputy Secretary and Secretary.
  2. Restore Executive Order 11246 to the Federal Highway Administration immediately and staff it accordingly for proper implementation.  Assign “floor” goals to each state recipient of federal funds and enforce them.  States such as California have never been in compliance with the USDOT DBE program and after 27 years of implementation perhaps we should make it a reality.
  3. Return to enforcement of the Federal False Claims Act in regards to contracting.  Fronts, fraudulent activity, false minority business reporting should be dealt with firmly by our Justice Department.  Establish a “False Claims Hotline”.  The NBCC alone would keep the activity going at full force.
  4. Fund the SBA so that it can accomplish its mission.  $2 billion would be a great start.  Each district office should be the center of technical assistance, lending activity and contractual consulting for every community in America.
  5. Restore the Mentor/Protégé program and put it under the direct oversight of OMB.  The failure with it before was that there was poor oversight if oversight at all.
  6. Include diversity in the TARP program (Bailout).  To date, this has been a virtual whites only program sponsored by the federal government and the US Congress.  It’s a flashback to the pre-civil rights era.
  7. Restaff and invigorate the Title VI (US Civil Rights Act of 1964) office of the USDOJ Civil Rights Office.  Oh, how we yearn for another Deval Patrick.  Recruit someone of that ilk.
  8. Legislate a renewal of the White House Conference on Small Business.  We must engage our small businesses in the governmental process once again.  These conferences were very successful and provided great insight for Congress and the Administration on pertinent issues confronting small businesses.
  9. Have the US Commission on Civil Rights (once it is staffed with competent people) to perform a Title VI (US Civil Rights Act of 1964) audit on all federal agencies.  The last one, done in the 1980’s, was quite helpful and provided much opportunity.  The EPA is now one of a few agencies addressing Title VI enforcement.
  10. Section 3 of the HUD Act, 24CFRpart135, is sparsely enforced by recipients of HUD funding.  It is at about 5% compliance which is better than the 0% compliance when the NBCC started addressing this issue.  This is a business incubator and job creator for those at risk.  We must do better especially in these economic challenging times.  Governors, mayors, county councils, public housing authorities must start complying with this economic development program written to address urban areas living under the poverty level.


I could go on and on but the above would be a fantastic start to the Change we all look forward to.  The NBCC has 151 chapters throughout the United States and 40+ more else throughout the world.  We are the largest Black business association on the globe and please count on us to be your partner in this great endeavor – diversity within our economy.